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articles of the tian de business system

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  • 1. ARTICLES OF THE TianDe BUSINESS SYSTEM The purpose of these Articles is to regulate the fundamental organizational and legal matters relating to cooperation among the primary participants in TianDe business based on the common use of trademarks, patents, licences and the business management system of TianDe. The main objective of this document is to inform interested parties and participants in TianDe business of the organization of our activities, the structure of relationships and the optimization of the participants’ business processes. 1. Basic concepts and terms TianDe Corporation (TianDe Partnership) - is a voluntary partnership of business entities that are joined by working together, that is distributing products and services with trademarks to which business entities that are part of this partnership are entitled. The aim of the partnership is to satisfy consumer demand for products and services with TianDe trademarks and to achieve material gain. Franchising - a form of relationship between independent market entities in which one party (the Licensor) grants the other party (the User) the right to establish and run a business under TianDe trademarks for a royalty. Franchising Agreement - a legal agreement concluded between the Dealer Centre (the User/Franchisee) and the Licensor (Franchisor) that governs the mutual rights and obligations regarding the establishment and operation of business under TianDe trademarks, and also liability for a failure to meet the respective obligations. Licensor - a legal entity with the exclusive rights to the intellectual property and the business management system of TianDe. User - a party granted the right to use the exclusive rights to the intellectual property and the business management system of TianDe. Service Centre (SC) - a business entity that has received special permission (certificate) from the Licensor, distributes products with TianDe trademarks and provides consultants and consumers with the full range of products and printed publications of TianDe. Dealer Centre (DC) - a business entity that has entered into a Franchising Agreement or a similar agreement (in accordance with the law of the country in whose territory the Dealer Centre conducts its business and with the standards of international law) with the Licensor and that organizes the logistics and distribution of products with TianDe trademarks and supplies Service Centres, consultants and consumers with the full range of products and printed publications of TianDe.
  • 2. Consumer - a person who buys products with TianDe trademarks for personal consumption. Consultant - a consumer of TianDe products who is registered in the Integrated Information Service of the Licensor and who is entitled to a discount. Agent - a consultant, Dealer Centre or Service Centre that has entered into an agent/sub-agent agreement and that distributes products with the TianDe trademark. Agent activities of TianDe - activities of consultants, Service Centres and Dealer Centres focused on the acquisition of consumers of TianDe products and the distribution of goods and services with TianDe trademarks for remuneration or on contractual basis (agent/sub-agent agreement). Distribution - a form of activity related to the wholesale purchase and subsequent sale of goods to the end consumer on the regional market. Logistics - planning, control and management of the transportation, storage and distribution of goods carried out in the process of delivering finished products to the consumer in accordance with their interests and requirements; this also involves the transmission, keeping and processing of relevant information and related cash flows. Services with TianDe trademarks - services related to information, technical and consulting support, aiming at the distribution of goods with TianDe trademarks. Marketing Plan (Unified Sales Stimulation System) - a document describing a mathematical model for the calculation of agent remuneration. Brandbook - a guidebook on the correct location of the company identifiers (corporate identity elements) on various support panels; the description of the permissible and impermissible display of visual identifiers (colour, graphic elements, fonts); the description of components of business documentation; modular grid, style solutions for presentations and advertising materials; Point of Sale components; and instructions for the preparation of complex identifiers, such as websites, immovable objects, interiors, corporate culture (serving standards, dress code), etc. 2. General provisions 2.1. TianDe Partnership consists of the following business entities: 2.1.1. The Licensor with the exclusive right to the intellectual property and the business management system of TianDe; 2.1.2. TianDe Dealer Centres (franchisees); 2.1.3. TianDe Service Centres (warehouses); 2.1.4. Manufacturers of TianDe products; 2.1.5. Suppliers of TianDe products; 2.1.6. TianDe agents.
  • 3. 2.2. Any business entity that is a member of the partnership is a separate business entity and shall bear all risks associated with its business activities and full responsibility. 2.3. Any business entity that is a member of TianDe Partnership shall be governed by the law of the country in whose territory it is registered as a business entity and where it conducts its business. 3. Forms of activities carried out using the intellectual property of TianDe 3.1. The sale of products and services with TianDe trademarks to consumers. 3.2. The distribution of products and services with TianDe trademarks on the market. 3.3. The manufacture of products using TianDe trademarks, formulas and technologies. 3.4. The use of the Unified Sales Stimulation System (TianDe Marketing Plan) and the system of relationships in the implementation of individual stages of manufacture, logistics and sale to independent members of TianDe Partnership. 3.5. Other forms of activities not prohibited by law using the intellectual property of TianDe. 4. Forms of partnerships in TianDe Corporation 4.1. Purchase of products for personal consumption. 4.1.1. Purchase of TianDe products for personal consumption, without the intention of resale, is not considered a business activity and does not require any legislation. 4.2. Business and purchase activities. 4.2.1. In the framework of business and purchase activities, Dealer and Service Centres of TianDe conclude supply agreements (purchase-sale agreements) with higher- ranking Dealer and Service Centres of TianDe - suppliers recommended by the Licensor. 4.3. Agent activities 4.3.1. Agent activities may be pursued by those Dealer and Service Centres and consultants of TianDe whose income is created not only through business and purchase activities but also through the personal purchases of other consultants brought by the above Dealer and Service Centres and consultants. 4.4. Manufacture of goods and services with TianDe trademarks. 4.4.1. Manufacturers of TianDe products are independent business entities that manufacture products according to the orders placed by the Licensor or its partners. The relations between the Licensor and the Manufacturers of TianDe products are governed by special agreements. 4.5. Franchising. 4.5.1. TianDe franchising is a form of distributing goods and services and technologies on the market using an integrated business system based on close and long-
  • 4. term cooperation among all participants in the system and the cooperation between the parties to the Franchising Agreement - the franchisor (Licensor) and the franchisee (TianDe Dealer Centre). 5. Pricing 5.1. The manufacture, logistics and sale of products using TianDe trademarks are carried out by mutually independent business entities. The income of each participant of these follow-up stages represents a portion of the added value of the goods. A sum equal to the difference between the sales price for the end consumer and the actual production costs (taking the taxation of all participants into account) is subject to distribution among the participants. In the TianDe business system, portions of the added value of the goods are distributed among the manufacturers, logistics companies, suppliers, agents and the Licensor of the intellectual property of TianDe. 5.2. The Licensor recommends a method of distribution of the added value among participants based on the conjuncture of the market, its specialized knowledge, technologies and ideas on the best ways for distributing goods and services using TianDe trademarks on the market. These recommendations are provided in the form of sales price for logistics companies agreed upon with the manufacturer, the recommended prices for Dealer and Service Centres, agents and consultants, final retail prices for consumers, and remuneration for agents calculated using the Unified Sales Stimulation System (TianDe Marketing Plan). Abiding by the Licensor’s recommendations regarding pricing is mandatory. 6. Activities of TianDe Dealer and Service Centres 6.1. Activities of TianDe Dealer and Service Centres are governed by special normative provisions of the Licensor - the Articles of TianDe Dealer and Service Centres.

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