Note 35
U.S. Securities Action and VEB proceedings
On November 28, 2005, Ahold announced that it had reached an agreement with the lead plaintiffs to settle the securities
class action entitled "In re Royal Ahold N.V. Securities ERISA Litigation" (the "Securities Action"), which is pending before
the United States District Court for the District of Maryland ("District Court"). The agreement is subject to final court approval.
Preliminary court approval was granted on January 6, 2006. On November 28, 2005, Ahold also announced that it had
reached an agreement to settle litigation with the Vereniging van Effectenbezitters ("VEB") (the Dutch Shareholders'
Association).
Under the terms of the settlement agreement in the Securities Action, the lead plaintiffs agree to settle all claims in the
Securities Action against Ahold, its subsidiaries, the individual defendants and the underwriters for the sum of USD 1,109
(EUR 937). This amount includes USD 9 (EUR 8) as compensation to the VEB for facilitating the global settlement. The
settlement is worldwide and applies to all qualifying common shares of Ahold. The term "qualifying shares" refers to all those
common shares, which were purchased or received as dividends between July 30, 1999 and February 23, 2003. If holders of
more than 180 million shares opt out of the settlement, then Ahold will have the right to terminate the agreement and recover
the funds paid, other than those amounts spent on notice of the settlement.
Ahold will contribute to the settlement fund, from which the qualifying shares will be paid, in two installments: two thirds of
the settlement amount, USD 733 (EUR 619), was funded into escrow on January 11, 2006, following the preliminary court
approval of the settlement by the District Court and the remaining one third, USD 367 (EUR 310), will be funded into escrow
within six months following final court approval of the settlement. In addition, in January 2006, Ahold made a payment of
USD 9 (EUR 8) into an escrow account for payment to (an entity designated by) the VEB within ten days following final
court approval of the settlement as compensation to the VEB for facilitating the global settlement. As a consequence of the
settlement and as further discussed below, Ahold received an amount of approximately USD 109 (EUR 92) from its Director
Officer ("D&O") insurers in addition to payments it had previously received to cover legal expenses. The USD 109 (EUR 92)
was used for Ahold's payment to the settlement fund.
Under the terms of the agreement with the VEB, the VEB has terminated the proceedings before the Enterprise Chamber of
the Amsterdam Court of Appeals with respect to the annual financial statements of Ahold for the years 1998, 1999, 2000,
2001 and 2002. In consideration of the withdrawal of such proceedings and as compensation of costs incurred, Ahold has
paid the VEB an amount of EUR 2,5. In addition, as part of its commitment to contribute to and facilitate the global
settlement, the VEB has agreed that following the publication of the report by the investigators in the so-called "inquiry
procedure" (enquêteprocedure) before the Enterprise Chamber of the Amsterdam Court of Appeals, it will not pursue any
further legal action in those proceedings and it will not commence or support a proceeding for damages in any court.
On January 6, 2006, Ahold reached an agreement in principal to settle the ERISA action in exchange for USD 2,5 (EUR 2).
The terms of the settlement have not been finalized and the settlement agreement will be subject to court approval. The cost
of the settlement will be covered by insurance proceeds.
In February 2003, Ahold and it subsidiaries had in place D&O liability insurance coverage with combined limits of liability
of USD 200 (EUR 169). Following the 2003 announcement that Ahold would restate its earnings, a number of insurance
coverage disputes arose between Ahold and its D&O insurers, some of which led to litigation or arbitration. In July 2004, Ahold
announced that it had reached a settlement with its primary D&O insurance carrier, AIG Europe ("AIG"), regarding all pending
insurance coverage litigation with AIG regarding various D&O liability insurance policies placed by AIG (the "AIG Policies").
Under the terms of the settlement, Ahold and its subsidiary U.S. Foodservice, and their current and former directors and
officers, obtained access to USD 125 (EUR 106) of insurance coverage (Ahold also received extended discovery periods under
the AIG Policies) and Ahold made payments to AIG, which in the aggregate amounted to approximately USD 63 (EUR 51). In
2005, Ahold reached settlements with all but three of its excess D&O insurers, resulting in a 50% reduction of coverage limits.
As a result of the settlements with AIG and the excess insurers, Ahold has received approximately USD 150 (EUR 126) of
insurance proceeds of which USD 109 (EUR 92) was received in January 2006 and used by Ahold for its payment in the
settlement fund. Ahold remains in litigation before the District Court of Haarlem, the Netherlands, with the three excess D&O
insurers that have denied coverage to Ahold. The combined limits of liability currently in dispute with these three insurers is
approximately USD 24 (EUR 20).
AHOLD ANNUAL REPORT 2005 169
