The Alex Smith-49ers union will continue for at least another season.The agreement, first reported by the NFL Network's Michael Lombardi, came more than a week into the free-agent signing period and included an "ironing-out" session with coach Jim Harbaugh after Peyton Manning spurned the 49ers on Monday to sign with the Denver Broncos.But, in the end, Smith is back with the 49ers -- just as everyone around the NFL thought would happen all along.Smith's return to the 49ers had its share of drama, though. Harbaugh and offensive coordinator Greg Roman secretly traveled to Duke University in Durham, N.C., on March 13 to watch Manning throw."When the two of us started to talk, I very easily could have seen myself being a 49er," Manning said. "Thats why it was so hard."In the meantime, Smith took the first free-agent visit of his career on Sunday, meeting with Miami Dolphins coaches and team officials. But in the end, Smith decided -- despite some hard feelings -- that the 49ers offered him the best opportunity.Then, the 49ers waited for Manning to make a decision. And once Manning informed the 49ers of his decision, Smith found his old job waiting for him. Smith considered the 49ers' first and final contract proposal a low-ball offer."We have a contract on the table and it's up to him," 49ers CEO Jed York said on Monday. "We'd like for him (Alex Smith) to be here, and we'll see where it goes."Harbaugh was seen leaving the 49ers' team offices mid-day Monday, en route to a suspected meeting with Smith.Although not satisfied with the contract terms, Smith is back with the 49ers after enjoying his best NFL season under the direction of Harbaugh, Roman and quarterbacks coach Geep Chryst.The 49ers won the NFC West with a 13-3 record and reached the NFC championship game with Smith at quarterback.Smith's efficient play enabled the 49ers to tie the NFL record for fewest turnovers in a season with 10.He threw just five interceptions, and finished the season with 159 consecutive regular-season pass attempts without getting picked off. Steve Young holds the 49ers' record with 183 attempts without an interception, 1993.In two playoff games, Smith attempted another 68 passes without throwing an interception.Smith's best performance of the season came in the playoffs when he led the 49ers on two late-fourth quarter touchdown drives in a remarkable 36-32 victory over the New Orleans Saints in an NFC divisional-round game at Candlestick Park.It was the sixth time Smith led the 49ers to a fourth-quarter comeback victory on the season. Four of those come-from-behind wins took place on the road, tying the franchise record that Joe Montana set in 1989.While the 49ers' passing game was efficient with Smith, it was far from prolific. The 49ers ranked 29th in the league in passing yards. Moreover, the 49ers ranked 31st in third-down conversions (29.4 percent) and 30th in red-zone efficiency, scoring touchdowns on just 40.7 percent of their trips inside the opponents' 20-yard line.But the sides did not immediately hammer out a contract extension because the 49ers were reluctant to make a commitment in years and money that would lock him in as the starter for multiple seasons.The 49ers traded up to the No. 36 overall spot in the 2011 draft to choose Colin Kaepernick, and the 49ers wanted to keep the door open for Kaepernick to take over the starting job from Smith.Kaepernick has been working out daily at the 49ers' practice facility. On Monday, Kaepernick declined comment, saying only that he's "just working."Harbaugh believes in creating competition at all positions. And Kaepernick appears to have an opportunity to convince the coaching staff at some point in the near future that he gives the 49ers their best chance at success.Smith arrived with the 49ers in 2005 as the No. 1 overall pick. He signed a six-year, 49.5 million contract. But Smith agreed to a sizable pay cut after his fourth season. He ended up collecting 31.5 million in his first six seasons.Following the 2010 season, Smith admittedly was set to finally leave the 49ers. But soon after Harbaugh was hired to a five-year, 25 million contract, the new coach convinced Smith to stick around.During the NFL lockout, Smith took on a leadership role as he organized the "Camp Alex" workouts at San Jose State, though he was not officially under contract. The day the lockout lifted, Smith signed a one-year, 4 million contract. He maxed out his incentive package with another 2.5 million.Smith posted the best season of his career with a 61.4 completion rate, 3,144 yards passing with 17 touchdowns and five interceptions, and a passer rating of 90.7.