I think the best tools you can use are BookDesigner
https://wiki.mobileread.com/wiki/Book_Designer in which an excellent tutorial can be found at
https://www.mobileread.com/forums/showthread.php?t=10313 or Calibre at
http://calibre.kovidgoyal.net/
I ran your lit version threw Calibre and in just a few minutes came up with a nicely formatted LRF version. Attached are some screen shots of the book from the Sony eBook Library software:
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