There was 1 issue with a report but I was never told it was so grave I would be fired.
It was a typo.
Repeating what so many others have said, please DON’T sign the agreement unless you understand it.
Years ago, I signed for an agreement to receive severance pay, which prevented me from getting unemployment benefits because I the agreement stipulated that I had quit rather than being fired. (I was in a different state...laws may be different in your state.) The company offered me the agreement because paying me severance was a lot cheaper than the increase to the company’s unemployment insurance would have been. Based on the HR person’s comments, it sounds like you would be agreeing that you quit if you sign this agreement. What are your chances of getting another decent-paying job before the 5 months of severance pay are spent? Will a bad reference from this employer (if you refuse the agreement) make it harder for you to find a new job? On the other hand, can you rely on this employer to give you a good reference if you sign this agreement?
Non-competition clauses can also be a real problem, especially if your job and skill set are specialized. They can make it all but impossible to get another job in your field.
Most severance agreements have clauses stipulating that you won’t sue over certain things. Those “hold harmless” provisions might be fair and reasonable. Or, they might be the employer trying to cover his behind because there’s something you might have grounds to sue for - age or disability discrimination?
Last, I don’t see how the employer can legally withhold your last month’s pay if you don’t sign. If you worked that month, you earned the pay. Accrued vacation time may be trickier to claim, depending on what kind of employment agreement you signed (if any).
I am not a fan of running to lawyers with every little thing (people sue too much over trivial things), but this sounds like a time when a lawyer can keep you from making a costly mistake. A few hours of a lawyer’s time to review the agreement, and maybe having him write a letter or help you negotiate better terms is a lot cheaper than losing out on unemployment benefits or finding yourself all but shut out of your field.
Good luck!