Ok, I am trying to do a surface loft from the back-head of the heammer to the body. I am trying to create a loft surface that is tangent to each surface, sort of like the red lines in the drawing. It lets me select the full circle at the back of the head ( and because of this lets me tanget the loft to this surface, but not the body of the hammer), but when I try and select the body of the hammer to loft to, the lines for the rounded rectangle cut out surface are not connected. Like the other picture shows.

What can I do to fix this issue?

I have attached the file for viewing. I am using solidworks 2012