It’s not difficult to understand why someone would think that a big publishing company would be a good resource to publish their book. However, Penguin appears to be taking advantage of newbie book authors with a very aggressive contract.
The flat fee of $599 for print and digital formatting is acceptable and reasonable. Interior formatting for print is a complex and time-consuming process. What is not acceptable is owning the rights and taking a life-time royalty.
A new author does not often require a print edition of their book. They will most likely simply require an ePub (digital) edition that they can upload to Amazon, Barnes & Noble, etc. themselves.