This exception allows teams to sign players at the NBA's minimum salary without being penalized for going over the cap. Teams already over the cap can also use this exception.
A minimum salary exception player may be signed for up to two years. In the case of a two year contract, the second year is the minimum salary for that season (rather than the prior season). Such contracts cannot contain a signing bonus. Players signed to minimum salary contracts are allowed to be traded and the new team may use the exception. This exception was created to encourage teams to sign new talent and keep veterans in the game. The latter group has a rising minimum salary that goes up based on how many years the player has played in the league and the amount of revenue the league has brought in overall. Furthermore, veterans who have played in the NBA for at least 3 seasons and are playing under a one-year, ten-day or rest-of-season contract, has any amount above the minimum salary paid by the League. The team only has to pay the minimum salary for that player. This encourages teams to sign veteran free agents.