This excerpt taken from the HPQ 10-Q filed Jun 8, 2007.
VII. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS
The Committee shall have the power to modify, extend or renew outstanding options and authorize the grant of new options in substitution therefor, provided that any such action may not have the effect of altering or impairing any rights or obligations of any option previously granted without the consent of the optionee.
The Committee shall have the power to lower the exercise price of an outstanding option not intended to qualify as an ISO under the Code; provided, however, that the exercise price per share may not be reduced below 75% of the fair market value of a share of Common Stock of the Company on the date the action is taken to reduce the exercise price. Such fair market value shall mean, unless the Committee deems otherwise, as of any date, the closing sales price for such Common Stock as of such date (or if no sales were reported on such date, the closing sales price on the last preceding day on which a sale was made) as reported in such source as the Committee deems reliable.