CHARLOTTE, N.C. — After spending his entire life in North Carolina, Julius Peppers wants out.

The four-time Pro Bowl defensive end has decided he won't sign a long-term deal with the Carolina Panthers when he becomes an unrestricted free agent on Feb. 26.

Peppers, who grew up in tiny Bailey, N.C., starred in college at North Carolina and was the Panthers' first-round pick in 2002, believes Carolina's defensive system is not for him — even after recording a career-high 14 1/2 sacks this season.

"He loves the state of North Carolina. His family is there. The easier situation for him would be to stay in Carolina," his agent, Carl Carey, said Saturday. "But the decision that he faced was, do I stay in Carolina and perhaps never reach my full potential? Or do I open myself to the possibilities to finish my career elsewhere? He chose the latter."

Carey, who first told ESPN.com of Peppers' decision early Saturday, said Peppers wants to play in a 3-4 defense. The Panthers use a 4-3 alignment.

"He certainly feels that he can excel and thrive in a 3-4 defense," Carey said. "He is also open to just another system in general that will allow him to maximize his athletic abilities."

Peppers' decision leaves the Panthers with a big decision to make.

The team could place the franchise tag on Peppers, which would virtually force him to stay with the Panthers. Under that scenario, another team could sign Peppers only by giving Carolina two first-round draft picks in return.

But doing that would mean the Panthers would have to give Peppers a one-year deal worth a whopping $16.7 million. And Peppers could also decide to hold out.

The Panthers used the franchise tag this season on starting left tackle Jordan Gross, who'll also become an unrestricted free agent and command a large contract, leaving the Panthers' with salary-cap concerns.

Panthers general manager Marty Hurney, who was informed of Peppers' decision in a meeting with Carey in Houston on Thursday, did not immediately return a phone call Saturday seeking comment.

The Panthers have been trying to sign Peppers to an extension for the past two years. But Peppers, in a statement released by Carey, said he wants to go elsewhere.

"I am seeking new challenges that will allow me to grow, develop and reach my personal potential on the football field," Peppers said. "I strongly feel that making a move at this time is in my best interest. I appreciate the entire Panthers organization and am thankful for the seven seasons I've spent with the team."

Peppers, the No. 2 overall pick in the 2002 draft, became a starter from Day One. A freakish athlete, the 6-foot-7 Peppers reached the Pro Bowl three consecutive years from 2004-06 before an awful 2007 season where he recorded only 2› sacks.

The Panthers moved Peppers from left defensive end to the right side this season, and his big numbers returned and he was picked for the Pro Bowl again. However, Peppers was held to two tackles and no sacks in the Panthers' shocking 33-13 NFC divisional playoff loss to Arizona last weekend.

The defeat was part of a late-season defensive swoon for Carolina, which allowed 30 or more points in six of its last seven games.

"Julius has tremendous respect for the coaching staff and he has never been the type of guy that has wanted to change anything that the coaching staff was doing," Carey said. "He has submitted to their defense and has tried his very best to operate within it.

"He feels that despite the accolades and the achievements that he still has something more offer. He feels that it's going to take a new system in order for that talent that he still has within himself to be tapped."

Carey wouldn't say what teams Peppers, who turns 29 Sunday, would like to play for. He also declined to address speculation the Panthers could place the franchise tag on Peppers and then trade him. Kansas City dealt defensive end Jared Allen to Minnesota last year in exchange for a first-round pick and two third-round choices.