Exercise 10.5 For items 1 through 5 below, determine whether the suit would be direct or derivative.

1. The Certificate of Incorporation of XYZ Corp. requires the corporation to pay Class A shareholders twice the dividend of Class B shareholders. This year, however, XYZ Corp. paid the same amount of dividends to shareholders of both classes. Anderson, a Class A shareholder, sues.

2. Birkenstock is a director of XYZ Corp. He is also the sole shareholder of HIJ Co. XYZ agrees to buy HIJ for $5 million. Croc is a shareholder of XYZ and thinks XYZ is overpaying for HIJ. She sues Birkenstock and the other board members of XYZ for breach of fiduciary duties.

3. The board of directors of XYZ Corp. entered into a merger transaction with B Corp. Under the terms of the merger agreement, XYZ Corp. merged into B Corp. and the shareholders of XYZ were cashed out at $55 per share. After the merger had been completed, Tuba, a shareholder of XYZ, was unhappy with the transaction, believing that the company was worth substantially more than $55 per share. As a result, she sues the board for breach of its fiduciary duty.

4. Ranum, the CEO of Matrix Development Inc. (MDI), purchased a parcel of property adjoining a shopping center owned by MDI for himself. Porch, a shareholder of MDI, is unhappy with the transaction and sues Ranum for breach of fiduciary duty.

5. Chumba Inc. is fined $100 million by the EPA for dumping hazardous waste. Ralston, a Chumba stockholder, sues the Chumba board for failure to provide adequate oversight.