Players in the
CBA who qualify for those are known as
Qualifying Veteran Free Agents. Basically, this rule exists to get around
salary cap issues, by allowing a team to
break the salary cap to resign their own free agents, at
pay of up to the
player's maximum salary.
When a player with this exception is traded, his
Bird rights also trade with him. This contract exception can last for up to
seven years, and while under this contract, the player can receive up to a 12.5% salary increase,
per annum.
The reason that is is known as "The Larry Bird Exception" was that the Boston Celtics were the first team to use it this with...you guessed it...Larry Bird.
There is also a weaker exception known as Early Bird Exception.