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The Jazz will send San Antonio the rights to guard Olivier Hanlan, whom Utah drafted in the second-round of the 2015 NBA draft.
The $7 million salary in the final year of Diaw's contract allows the Spurs the salary cap space to sign Gasol to a two-year, $30 million-plus deal agreed upon on Monday.
Diaw, 34, will be a terrific addition to the Jazz lineup, a versatile forward with championship experience to help a young team trying to reach the playoffs for the first time under coach Quin Snyder. A tremendous and vital locker-room presence, Diaw was a favorite of Spurs veterans and coach Gregg Popovich.
Diaw rejuvenated his career in five seasons with the Spurs, including an immense role in the 2014 NBA championship run. Diaw's all-around playmaking ability should fit well with the offensive talent on the Jazz.
Diaw is the second ex-Spur to join the team this summer, including guard George Hill.
Hanlan played in Lithuania last season, and had three strong years at Boston College.