It becomes your duty to issue a reply notice denying the allegations leveled by them in their legal notice against you.
Your silence or non response will be deemed that you have accepted their allegations against you.
Therefore you contact a lawyer with knowledge and experience immediately and issue a reply notice denying their accusations including refusing to pay the amount demanded by them and the agreement they are forcing you to sign.
Your first reaction is often concern or fear, but there's nothing in the letter by a court or a judge that orders you to do anything
By itself, a cease and desist letter can't do much, yet it may advise you that if you don't comply, the other party will sue you. In some cases, the party actually will sue you, while in other cases, they won't. Whatever you do, though, don't ignore the letter or you risk having the other party commence a lawsuit against you.
Discuss with your lawyer how to save evidence, such as texts, emails, and copies of your website. Don't destroy evidence, as you may need it at a later time.