Axillary bud and terminal bud are derived from the activity of:

The apical meristem is responsible for axillary and terminal bud formation. The apical meristem is the growth in a plant which seems at the root point of young shoots and leaves. Related Theory The apical meristem is also recognized as a growing tip. The main aspect this is to initiate the operation of new cell formation in new seedlings at the hints of roots and shoots which ultimately contributes to forming the buds. It help in raising the height and length of the plant.