San Jose will retain 50% of Dillon's salary and cap hit. Additionally, the Capitals will trade their own 2021 third-round pick unless they win the Stanley Cup, in which case they will give up the Arizona Coyotes' 2020 third-round selection, according to TSN's Pierre LeBrun.
The 2020 second-round pick was originally acquired from the Colorado Avalance.
Dillon, 29, recorded one goal and 14 points in 59 games this season with the Sharks. He led San Jose in hits (178) and ranked fourth in blocked shots (67) while averaging 19:22 of ice time per game.