This excerpt taken from the HPQ DEF 14A filed Jan 27, 2010.
Exercise Price. The per share exercise price for the Shares to be issued pursuant to exercise of an Option shall be determined by the Administrator, subject to the following:
i. The per Share exercise price of an Option shall be no less than 100% of the Fair Market Value per Share on the Grant Date.
ii. Notwithstanding the foregoing, at the Administrators discretion, Conversion Awards may be granted in substitution and/or conversion of options or stock appreciation rights of an acquired entity, with a per Share exercise price of less than 100% of the Fair Market Value per Share on the date of such substitution and/or conversion if such exercise price is based on a formula set forth in the terms of such options/stock appreciation rights or in the terms of the agreement providing for such acquisition.