1. Click the "Groups" tab. Click on "object_0" and click "Hide".

2. Now, click the "Model" tab and go back into vertex selection mode. (Make sure "Ignore Backfacing" is off) and select the red verts marked in the green circles. Scale them to 0,0,0. (Or just press Ctrl+Shift+X,Y,Z)

3. Go to "Edit -> Unhide All" (Or press Ctrl+Shift+H). First, select the red verts maked in the green circle labeled "1". Scale them to 0,0,0. Next, select the red verts in the second green circle. Scale them to 0,0,0 as well.

Hope this helps.
