Here's a quick look at some of the key terms in relation to the salary cap (all according to the NBA's Collective Bargaining Agreement):
Bird exception/rights: An exception that allows a team to exceed the salary cap in order to re-sign their own free agents. A team has a player's “Bird rights” if the player has been in the NBA for three seasons without changing teams as a free agent or clearing waivers.
If a team owns a veteran's early bird rights (player has been in the NBA for two seasons without changing teams as a free agent or clearing waivers), it can sign a player for up to 105% of the NBA's average player salary from the previous season, or $7.