diff --git a/src/helma/framework/core/AppClassLoader.java b/src/helma/framework/core/AppClassLoader.java
new file mode 100644
index 00000000..b2ba2888
--- /dev/null
+++ b/src/helma/framework/core/AppClassLoader.java
@@ -0,0 +1,37 @@
+// ApplicationClassLoader.java
+
+package helma.framework.core;
+
+import java.net.URL;
+import java.net.URLClassLoader;
+import java.util.Enumeration;
+import java.security.CodeSource;
+import java.security.Permission;
+import java.security.PermissionCollection;
+import java.security.Permissions;
+
+
+/**
+ * ClassLoader subclass with package accessible addURL method.
+ */
+public class AppClassLoader extends URLClassLoader {
+
+    private final String appname;
+
+   /**
+    *  Create a HelmaClassLoader with the given application name and the given URLs
+    */
+    public AppClassLoader(String appname, URL[] urls) {
+	super ( urls, AppClassLoader.class.getClassLoader());
+	this.appname = appname;
+    }
+
+    protected void addURL (URL url) {
+	super.addURL (url);
+    }
+
+    public String getAppName () {
+	return appname;
+    }
+
+}
diff --git a/src/helma/framework/core/Application.java b/src/helma/framework/core/Application.java
index 25a5ddfa..ba49c454 100644
--- a/src/helma/framework/core/Application.java
+++ b/src/helma/framework/core/Application.java
@@ -17,6 +17,7 @@ import org.apache.xmlrpc.*;
 import java.util.*;
 import java.io.*;
 import java.net.URLEncoder;
+import java.net.MalformedURLException;
 import java.lang.reflect.*;
 import java.rmi.*;
 import java.rmi.server.*;
@@ -122,13 +123,6 @@ public final class Application implements IPathElement, Runnable {
     private String xmlrpcHandlerName;
 
 
-    /**
-     *  Zero argument constructor needed for RMI
-     */
-    /* public Application () throws RemoteException {
-	super ();
-    } */
-
     /**
      * Build an application with the given name in the app directory. No Server-wide
      * properties are created or used.
@@ -224,7 +218,7 @@ public final class Application implements IPathElement, Runnable {
     /**
      * Get the application ready to run, initializing the evaluators and type manager.
      */
-    public void init () throws DatabaseException, ScriptingException {
+    public void init () throws DatabaseException, ScriptingException, MalformedURLException {
 	// scriptingEngine = new helma.scripting.fesi.FesiScriptingEnvironment ();
 	// scriptingEngine.init (this, props);
 
@@ -540,11 +534,11 @@ public final class Application implements IPathElement, Runnable {
 	    if (rootObject == null) {
 	        try {
 	            if ( classMapping.containsKey("root.factory.class") && classMapping.containsKey("root.factory.method") ) {
-	                Class c = Class.forName( classMapping.getProperty("root.factory.class") );
+	                Class c = typemgr.loader.loadClass( classMapping.getProperty("root.factory.class") );
 	                Method m = c.getMethod( classMapping.getProperty("root.factory.method"), null );
 	                rootObject = m.invoke(c, null);
 	            } else {
-	                Class c = Class.forName( classMapping.getProperty("root") );
+	                Class c = typemgr.loader.loadClass( classMapping.getProperty("root") );
 	                rootObject = c.newInstance();
 	            }
 	        } catch ( Exception e )	{
diff --git a/src/helma/framework/core/RequestEvaluator.java b/src/helma/framework/core/RequestEvaluator.java
index 4270a1d0..64d2e043 100644
--- a/src/helma/framework/core/RequestEvaluator.java
+++ b/src/helma/framework/core/RequestEvaluator.java
@@ -72,13 +72,11 @@ public final class RequestEvaluator implements Runnable {
 	if (scriptingEngine == null) {
 	    String engineClassName = app.getProperty (
 	            "scripting.engine.factory",
-	            "helma.scripting.fesi.FesiEngineFactory");
+	            "helma.scripting.fesi.FesiEngine");
 	    try {
-	        Class clazz = Class.forName (engineClassName);
-	        Class[] argClasses = {app.getClass(), getClass()};
-	        Method method = clazz.getMethod ("getEngine", argClasses);
-	        Object[] args = {app, this};
-	        scriptingEngine = (ScriptingEngine) method.invoke (null, args);
+	        Class clazz = app.typemgr.loader.loadClass (engineClassName);
+	        scriptingEngine = (ScriptingEngine) clazz.newInstance ();
+	        scriptingEngine.init (app, this);
 	    } catch (Exception x) {
 	        Throwable t = x;
 	        if (x instanceof InvocationTargetException)
diff --git a/src/helma/framework/core/TypeManager.java b/src/helma/framework/core/TypeManager.java
index 60b329ba..0ae4710b 100644
--- a/src/helma/framework/core/TypeManager.java
+++ b/src/helma/framework/core/TypeManager.java
@@ -9,7 +9,8 @@ import helma.scripting.*;
 import helma.util.*;
 import java.util.*;
 import java.io.*;
-
+import java.net.URL;
+import java.net.MalformedURLException;
 
 /**
  * The type manager periodically checks the prototype definitions for its 
@@ -20,8 +21,9 @@ public final class TypeManager {
 
     Application app;
     File appDir;
-    HashMap prototypes;
-    HashMap zipfiles;
+    HashMap prototypes;   // map of prototypes
+    HashMap zipfiles;        // map of zipped script files
+    HashSet jarfiles;        // set of Java archives
     long lastCheck = 0;
     long appDirMod = 0;
     // a checksum that changes whenever something in the application files changes.
@@ -31,6 +33,9 @@ public final class TypeManager {
     Prototype hopobjectProto;
     // the global prototype
     Prototype globalProto;
+
+    // app specific class loader, includes jar files in the app directory
+    AppClassLoader loader;
     
     final static String[] standardTypes = {"user", "global", "root", "hopobject"};
 
@@ -39,7 +44,7 @@ public final class TypeManager {
     final static String actionExtension = ".hac";
     final static String skinExtension = ".skin";
 
-    public TypeManager (Application app) {
+    public TypeManager (Application app) throws MalformedURLException {
         this.app = app;
         appDir = app.appDir;
         // make sure the directories for the standard prototypes exist, and lament otherwise
@@ -54,6 +59,9 @@ public final class TypeManager {
         }
         prototypes = new HashMap ();
         zipfiles = new HashMap ();
+        jarfiles = new HashSet ();
+        URL helmajar = new URL ("file:"+app.home.getAbsolutePath()+"/lib/helma.jar");
+        loader = new AppClassLoader(app.getName(), new URL[] { helmajar });
     }
 
 
@@ -111,6 +119,16 @@ public final class TypeManager {
 	            }
 	            continue;
 	        }
+	        if (list[i].endsWith (".jar")) {
+	            if (!jarfiles.contains (list[i])) {
+	                jarfiles.add (list[i]);
+	                File f = new File (appDir, list[i]);
+	                try {
+	                    loader.addURL (new URL ("file:"+f.getAbsolutePath()));
+	                } catch (MalformedURLException ignore) {}
+	            }
+	            continue;
+	        }
 	        if (list[i].indexOf ('.') > -1)
 	            continue;
 	        Prototype proto = getPrototype (list[i]);
diff --git a/src/helma/main/HelmaSecurityManager.java b/src/helma/main/HelmaSecurityManager.java
new file mode 100644
index 00000000..e617e4ad
--- /dev/null
+++ b/src/helma/main/HelmaSecurityManager.java
@@ -0,0 +1,94 @@
+// HelmaSecurityManager.java
+
+package helma.main;
+
+import java.security.Permission;
+import java.io.FileDescriptor;
+import java.net.InetAddress;
+import java.util.HashSet;
+import helma.framework.core.AppClassLoader;
+
+/**
+ *  Liberal security manager for Helma system that makes sure application code 
+ *  is not allowed to exit the VM and set a security manager.
+ *
+ *  This class can be subclassed to implement actual security policies. It contains
+ *  a utility method <code>getApplication</code> that can be used to determine 
+ *  the name of the application trying to execute the action in question, if any.
+ */
+public class HelmaSecurityManager extends SecurityManager {
+
+    // The set of actions forbidden to application code.
+    // We are pretty permissive, forbidding only System.exit() 
+    // and setting the security manager.
+    private final static HashSet forbidden = new HashSet ();
+    static {
+	forbidden.add ("exitVM");
+	forbidden.add ("setSecurityManager");
+    }
+
+    public void checkPermission(Permission p) {
+	if (p instanceof RuntimePermission) {
+	    if (forbidden.contains (p.getName())) {
+	        Class[] classes = getClassContext();
+	        for (int i=0; i<classes.length; i++) {
+	            if (classes[i].getClassLoader() instanceof AppClassLoader)
+	                throw new SecurityException (p.getName()+" not allowed for application code");
+	        }
+	    }
+	}
+    }
+    public void checkPermission(Permission p, Object context) {
+    }
+    public void checkCreateClassLoader() {}
+    public void checkAccess(Thread thread) {}
+    public void checkAccess(ThreadGroup group) {}
+    public void checkExit(int status) {
+	Class[] classes = getClassContext();
+	for (int i=0; i<classes.length; i++) {
+	    if (classes[i].getClassLoader() instanceof AppClassLoader)
+	        throw new SecurityException ("operation not allowed for application code");
+	}
+    }
+    public void checkExec(String cmd) {}
+    public void checkLink(String lib) {}
+    public void checkRead(FileDescriptor fdesc) {}
+    public void checkRead(String file) {}
+    public void checkRead(String file, Object context) {}
+    public void checkWrite(FileDescriptor fdesc) {}
+    public void checkWrite(String file) {}
+    public void checkDelete(String file) {}
+    public void checkConnect(String host, int port) {}
+    public void checkConnect(String host, int port, Object context) {}
+    public void checkListen(int port) {}
+    public void checkAccept(String host, int port) {}
+    public void checkMulticast(InetAddress addr) {}
+    public void checkMulticast(InetAddress addr, byte ttl) {}
+    public void checkPropertiesAccess() {}
+    public void checkPropertyAccess(String key) {}
+    public boolean checkTopLevelWindow(Object window) { return true; }
+    public void checkPrintJobAccess() {}
+    public void checkSystemClipboardAccess() {}
+    public void checkAwtEventQueueAccess() {}
+    public void checkPackageAccess(String pkg) {}
+    public void checkPackageDefinition(String pkg) {}
+    public void checkSetFactory() {}
+    public void checkMemberAccess(Class clazz, int which) {}
+    public void checkSecurityAccess(String target) {}
+
+    /**
+     *  Utility method that returns the name of the application trying
+     *  to execute the code in question. Returns null if the current code 
+     *  does not belong to any application.
+     */
+    protected String getApplication () {
+	Class[] classes = getClassContext();
+	for (int i=0; i<classes.length; i++) {
+	    if (classes[i].getClassLoader() instanceof AppClassLoader)
+	        return ((AppClassLoader) classes[i].getClassLoader()).getAppName ();
+	}
+	// no application class loader found in stack - return null
+	return null;
+    }
+
+}
diff --git a/src/helma/main/HopSocketFactory.java b/src/helma/main/HelmaSocketFactory.java
similarity index 90%
rename from src/helma/main/HopSocketFactory.java
rename to src/helma/main/HelmaSocketFactory.java
index a8fd97c4..bdf674f3 100644
--- a/src/helma/main/HopSocketFactory.java
+++ b/src/helma/main/HelmaSocketFactory.java
@@ -15,11 +15,11 @@ import java.io.IOException;
  * server-to-server.
  */
 
-public class HopSocketFactory extends RMISocketFactory {
+public class HelmaSocketFactory extends RMISocketFactory {
 
     private InetAddressFilter filter;
 
-    public HopSocketFactory () {
+    public HelmaSocketFactory () {
 	filter = new InetAddressFilter ();
     }
 
diff --git a/src/helma/main/Server.java b/src/helma/main/Server.java
index 6d4b9adb..bf59792c 100644
--- a/src/helma/main/Server.java
+++ b/src/helma/main/Server.java
@@ -25,8 +25,8 @@ import org.apache.xmlrpc.*;
 
  public class Server implements IPathElement, Runnable {
 
-    public static final String version = "1.2pre3+ 2002/10/24";
-    public long starttime;
+    public static final String version = "1.2pre3+ 2002/11/21";
+    public final long starttime;
 
     // if true we only accept RMI and XML-RPC connections from 
     // explicitly listed hosts.
@@ -141,13 +141,46 @@ import org.apache.xmlrpc.*;
 	        usageError = true;
 	}
 
+	// get main property file from home dir or vice versa, depending on what we have.
+	// get property file from hopHome
+	if (propfile == null) {
+	    if (homeDir != null)
+	        propfile = new File (homeDir, "server.properties").getAbsolutePath ();
+	    else
+	        propfile = new File ("server.properties").getAbsolutePath ();
+	}
+	// create system properties
+	sysProps = new SystemProperties (propfile);
+
+	// check if there's a property setting for those ports not specified via command line
+	if (websrvPort == 0 && sysProps.getProperty ("webPort") != null) try {
+	    websrvPort = Integer.parseInt (sysProps.getProperty ("webPort"));
+	} catch (NumberFormatException fmt) {
+	    System.err.println ("Error parsing web server port property: "+fmt);
+	}
+	if (ajp13Port == 0 && sysProps.getProperty ("ajp13Port") != null) try {
+	    ajp13Port = Integer.parseInt (sysProps.getProperty ("ajp13Port"));
+	} catch (NumberFormatException fmt) {
+	    System.err.println ("Error parsing AJP1.3 server port property: "+fmt);
+	}
+	if (rmiPort == 0 && sysProps.getProperty ("rmiPort") != null) try {
+	    rmiPort = Integer.parseInt (sysProps.getProperty ("rmiPort"));
+	} catch (NumberFormatException fmt) {
+	    System.err.println ("Error parsing RMI server port property: "+fmt);
+	}
+	if (xmlrpcPort == 0 && sysProps.getProperty ("xmlrpcPort") != null) try {
+	    xmlrpcPort = Integer.parseInt (sysProps.getProperty ("xmlrpcPort"));
+	} catch (NumberFormatException fmt) {
+	    System.err.println ("Error parsing XML-RPC server port property: "+fmt);
+	}
+
 	// check server ports. If no port is set, issue a warning and exit.
 	if (!usageError && (websrvPort | ajp13Port | rmiPort | xmlrpcPort) == 0) {
 	    System.out.println ("  Error: No server port specified.");
 	    usageError = true;
 	}
 
-
+	// if there's a usage error, output message and exit
 	if (usageError ) {
 	    System.out.println ("usage: java helma.main.Server [-h dir] [-f file] [-p port] [-w port] [-x port]");
 	    System.out.println ("  -h dir     Specify hop home directory");
@@ -160,7 +193,7 @@ import org.apache.xmlrpc.*;
 	    System.exit (0);
 	}
 
-	// check if servers are already running on the given ports
+	// check if any of the specified server ports is in use already
 	try {
 	    if (websrvPort > 0)
 	        checkRunning (websrvPort);
@@ -175,18 +208,6 @@ import org.apache.xmlrpc.*;
 	    System.exit (1);
 	}
 
-
-	// get main property file from home dir or vice versa, depending on what we have.
-	// get property file from hopHome
-	if (propfile == null) {
-	    if (homeDir != null)
-	        propfile = new File (homeDir, "server.properties").getAbsolutePath ();
-	    else
-	        propfile = new File ("server.properties").getAbsolutePath ();
-	}
-	// create system properties
-	sysProps = new SystemProperties (propfile);
-
 	// get hopHome from property file
 	if (homeDir == null)
 	    homeDir = sysProps.getProperty ("hophome");
@@ -343,7 +364,7 @@ import org.apache.xmlrpc.*;
 
 	    if (rmiPort > 0) {
 	        if (paranoid) {
-	            HopSocketFactory factory = new HopSocketFactory ();
+	            HelmaSocketFactory factory = new HelmaSocketFactory ();
 	            String rallow = sysProps.getProperty ("allowWeb");
 	            if (rallow != null) {
 	                StringTokenizer st = new StringTokenizer (rallow, " ,;");
@@ -370,6 +391,19 @@ import org.apache.xmlrpc.*;
 	    return;
 	}
 
+	// set the security manager. 
+	// the default implementation is helma.main.HelmaSecurityManager.
+	try {
+	    String secManClass = sysProps.getProperty ("securityManager");
+	    if (secManClass != null) {
+	        SecurityManager secMan = (SecurityManager) Class.forName(secManClass).newInstance ();
+	        System.setSecurityManager (secMan);
+	        getLogger().log ("Setting security manager to "+secManClass);
+	    }
+	} catch (Exception x) {
+	    getLogger().log ("Error setting security manager: "+x);
+	}
+
 	// start applications
 	appManager.startAll ();
 
diff --git a/src/helma/main/launcher/FilteredClassLoader.java b/src/helma/main/launcher/FilteredClassLoader.java
new file mode 100644
index 00000000..a6587bdd
--- /dev/null
+++ b/src/helma/main/launcher/FilteredClassLoader.java
@@ -0,0 +1,36 @@
+// FilteredClassLoader.java
+
+package helma.main.launcher;
+
+import java.net.URL;
+import java.net.URLClassLoader;
+import java.util.Hashtable;
+import java.security.PermissionCollection;
+import java.security.Permissions;
+import java.security.Policy;
+import java.security.CodeSource;
+
+/**
+ * ClassLoader that is able to exclude certain packages from loading.
+ */
+public class FilteredClassLoader extends URLClassLoader {
+
+   /**
+    *  Create a server wide class loader that doesn't see the scripting engine(s)
+    *  embedded in helma.jar. These files should be loaded by the per-application
+    *  class loaders so that special security policies can be applied to them and
+    *  so that they can load classes from jar files in the app directories.
+    */
+    public FilteredClassLoader(URL[] urls) {
+	super (urls);
+    }
+
+    /**
+     *  Mask classes that implement the scripting engine(s) contained in helma.jar
+     */
+    protected Class findClass (String name) throws ClassNotFoundException {
+	if (name != null && (name.startsWith ("helma.scripting.fesi") || name.startsWith ("FESI")))
+	    throw new ClassNotFoundException (name);
+	return super.findClass (name);
+    }
+}
diff --git a/src/helma/main/launcher/Main.java b/src/helma/main/launcher/Main.java
index 96abb1fc..d3b62dcc 100644
--- a/src/helma/main/launcher/Main.java
+++ b/src/helma/main/launcher/Main.java
@@ -7,6 +7,8 @@ import java.net.URL;
 import java.io.File;
 import java.io.FilenameFilter;
 import java.lang.reflect.Method;
+import java.util.ArrayList;
+import java.security.Policy;
 
 /** 
  *  Helma bootstrap class. Figures out Helma home directory, sets up class path and 
@@ -14,44 +16,86 @@ import java.lang.reflect.Method;
  */
 public class Main {
 
+    public static final String[] jars = { "helma.jar",  "jetty.jar", "crimson.jar", "xmlrpc.jar", 
+                                                         "village.jar", "servlet.jar", "regexp.jar", "mail.jar", 
+                                                          "activation.jar",  "netcomponents.jar", "jimi.jar",
+                                                          "apache-dom.jar", "jdom.jar"};
+
 
     public static void main (String[] args) throws Exception {
 
-	// try to get Helma installation directory
-	try {
-	    URLClassLoader apploader = (URLClassLoader) Main.class.getClassLoader();
-	    // (URLClassLoader) Thread.currentThread().getContextClassLoader();
-	    URL homeUrl = apploader.findResource("helma/main/launcher/Main.class");
-	    String home = homeUrl.toString().substring(4);
-	    int excl = home.indexOf ("!");
-	    if (excl > -1) {
-	        home = home.substring(0, excl);
-	        homeUrl = new URL (home);
-	        File f = new File (homeUrl.getPath());
-	        f = f.getParentFile();
-	        System.err.println ("GOT HOME: "+f);
-	    }
-	} catch (Exception ignore) {
-	    // unable to get Helma home dir from launcher jar
+	// check if home directory is set via command line arg. If not,
+	// we'll get it from the location of the jar file this class 
+	// has been loaded from.
+	String home = null;
+	// first, try to get helma home dir from command line options
+	for (int i=0; i<args.length; i++) {
+	    if (args[i].equals ("-h") && i+1<args.length)
+	        home = args[i+1];
 	}
-	File libdir = new File ("lib");
-	File[] files = libdir.listFiles (new FilenameFilter() {
+	URLClassLoader apploader = (URLClassLoader) ClassLoader.getSystemClassLoader();
+	// try to get Helma installation directory
+	if (home == null) {
+	    try {
+	        URL homeUrl = apploader.findResource("helma/main/launcher/Main.class");
+	        // this is a  JAR URL of the form
+	        //    jar:<url>!/{entry}
+	        // we strip away the jar: prefix and the !/{entry} suffix
+	        // to get the original jar file URL
+	        home = homeUrl.toString().substring(4);
+	        int excl = home.indexOf ("!");
+	        if (excl > -1) {
+	            home = home.substring(0, excl);
+	            homeUrl = new URL (home);
+	            File f = new File (homeUrl.getPath());
+	            home = f.getParent();
+	            // add home dir to the command line arguments
+	            String[] newArgs = new String [args.length+2];
+	            newArgs[0] = "-h";
+	            newArgs[1] = home;
+	            System.arraycopy (args, 0, newArgs, 2, args.length);
+	            args = newArgs;
+	        }
+	    } catch (Exception ignore) {
+	        // unable to get Helma home dir from launcher jar
+	    }
+	}
+	// set the current working directory to the helma home dir.
+	// note that this is not a real cwd, which is not supported
+	// by java. It makes sure relative to absolute path name
+	// conversion is done right, so for Helma code, this should 
+	// work.
+	System.setProperty ("user.dir", home);
+
+	// set up the class path
+	File libdir = new File (home, "lib");
+	ArrayList jarlist = new ArrayList ();
+	for (int i=0;i<jars.length;i++) {
+	    File jar = new File (libdir, jars[i]);
+	    if (jar.exists())
+	        jarlist.add (new URL ("file:" + jar.getAbsolutePath()));
+	}
+	// add all jar files from the lib/ext directory
+	File extdir =new File (libdir, "ext");
+	File[] files = extdir.listFiles (new FilenameFilter() {
 	    public boolean accept (File dir, String name) {
-	        if (name.startsWith ("helma"))
-	            return "helma.jar".equals (name);
 	        return name.endsWith (".jar");
 	    }
 	});
-	URL[] urls = new URL[files.length];
-	for (int i=0; i<files.length; i++) {
-	    urls[i] = new URL ("file:"+files[i].getAbsolutePath());
-	}
-	URLClassLoader loader = new URLClassLoader (urls);
+	if (files != null)
+	    for (int i=0;i<files.length; i++)
+	        jarlist.add (new URL ("file:" + files[i].getAbsolutePath()));
+	URL[] urls = new URL[jarlist.size()];
+	jarlist.toArray (urls);
+	FilteredClassLoader loader = new FilteredClassLoader (urls);
+	// set the new class loader as context class loader
 	Thread.currentThread().setContextClassLoader (loader);
+	// get the main server class
 	Class clazz = loader.loadClass ("helma.main.Server");
 	Class[] cargs = new Class[] { args.getClass() };
 	Method main = clazz.getMethod ("main", cargs);
 	Object[] nargs = new Object[] { args };
+	// run
 	main.invoke (null, nargs);
     }