Developer I hired won't assign IP - contract was unclear. Options?

On mobile so apologies for formatting. So basically hired a freelance developer to build core features of my SaaS. Paid him $25K over 6 months. Used a basic contract I found online. Now raising a seed round and during legal diligence which is wild, discovered the contract didn't have proper IP assignment language. Developer is now asking for 5% equity to sign an assignment.

I feel held hostage. What are my actual options here?

Update on my situation: Agency finally got 2 of the 3 offshore devs to sign assignments. Third dev is MIA — apparently left the agency months ago and they don't have current contact info. We're withholding final $15K payment until resolved. Agency is now threatening to sue us for non-payment.

Lawyer says we have a strong position since they breached first by not securing IP rights. Hoping they back down. What a mess....