Free agent forward Lance Stephenson will not return to the Indiana Pacers next season after signing a three-year deal with the Charlotte Hornets.

The Charlotte Observer reported that Stephenson, who had a breakout year for the Pacers last season, signed the contract on Wednesday morning after top Hornets executives, including team owner Michael Jordan and coach Steve Clifford, met with the four-year veteran on Tuesday.

According to reports, Stephenson, who averaged 13.8 points to go along with 7.2 rebounds and 4.6 assists per game last season, will earn $27 million over three years, but the Hornets hold a team option for the final year of the deal.

Alberto Ebanks, Stephenson's agent, confirmed the deal through a statement where the player expressed gratitude to the Pacers, who drafted Stephenson 40th overall in the 2010 NBA Draft.

"Lance is forever grateful for all the love he's received from Pacers fans. He is especially grateful to his teammates, [Pacers coach] Frank Vogel, [owner] Herb Simon, the Pacers management and most of all, Larry Bird," Ebanks said in a statement via ESPN.

The Pacers made it no secret that signing Stephenson to a new contract is their top priority this summer, but negotiations went down after the 23-year-old guard turned down a five-year, $44 million offer.

Stephenson's camp wanted a bigger offer, but the Pacers were unwilling to increase the financial details of the deal. Sources indicated that Stephenson's camp then asked for a shorter contract, but the Pacers did not budge.

"While we tried our best to come to the best possible terms for both sides, there was not sufficient flexibility in the terms of the contract, particularly the length of the contract," Ebanks said. "Reports throughout the negotiation process with Indiana have often strayed from the truth but suffice it to say that it was less about the money."

Aside from the Bobcats, the Dallas Mavericks also reportedly expressed strong interest in signing Stephenson. The Mavericks offered a two-year, $20 million deal, but the Stephenson-to-Dallas move did not push through after acquiring former Houston Rockets forward Chandler Parsons.

Parsons signed a three-year, $46 million offer sheet with the Mavericks, which the Rockets declined to match. Had the Rockets matched the offer, sources said that Stephenson would have moved to Dallas.