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A subscription agreement is a contract between a company and an investor to sell a specific number of shares at a predetermined price. It helps track shares sold and their pricing for privately held companies, detailing transaction information, including share quantity, price, and confidentiality provisions. Subscription agreements are crucial for companies seeking funding without going public or securing venture capital. They offer the advantage of selling stock without the need for SEC registration. However, disadvantages include no voting rights for investors and a lack of influence on the company's success.