diff --git a/MakeAPPL/main.cc b/MakeAPPL/main.cc
index 3b4db468b3..4218ed1ec9 100644
--- a/MakeAPPL/main.cc
+++ b/MakeAPPL/main.cc
@@ -147,9 +147,9 @@ int main(int argc, char *argv[])
 			longword(code1, 0x61000002);  // bsr *+2
 
 			word(code1, 0x0697); // addi.l #_, (a7) 
-			longword(code1, entrypoint + 8);
+			longword(code1, entrypoint + 12);
 			word(code1, 0x4e75); // rts
-
+			longword(code1, code1.tellp() + 4);
 			code1 << flt;
 
 			rsrc.addResource(Resource("CODE", 1, code1.str()));
diff --git a/Samples/SystemExtension/SystemExtension.r b/Samples/SystemExtension/SystemExtension.r
index a595c40546..07dee8fc29 100644
--- a/Samples/SystemExtension/SystemExtension.r
+++ b/Samples/SystemExtension/SystemExtension.r
@@ -1,13 +1,15 @@
-type 'INIT' (0) {
+type 'INIT' {
 	hex string dontBreakAtEntry = $"", breakAtEntry = $"A9FF";
 	longint = 0x61000002;	// bsr *+2
+relativeTo:
 	integer = 0x0697; // addi.l #_, (a7)
-	longint = $$long(fltfile + 8*8) + 8;
+	longint = $$long(fltfile + 8*8) + (fltfile-relativeTo)/8;
 	integer = 0x4e75; // rts
+	longint = fltfile/8;
 fltfile:
 	hex string;
 };
 
-resource 'INIT' (0) {
+resource 'INIT' (128) {
 	dontBreakAtEntry, $$read("SystemExtension.flt");
 };
diff --git a/libretro/Retro68Runtime.h b/libretro/Retro68Runtime.h
index a9a83996e1..8a8f96bdad 100644
--- a/libretro/Retro68Runtime.h
+++ b/libretro/Retro68Runtime.h
@@ -23,16 +23,22 @@
 	<http://www.gnu.org/licenses/>.
 */
 
-#define RETRO68_GET_DISPLACEMENT(DISPLACEMENT) \
+#define _RETRO68_GET_DISPLACEMENT(DISPLACEMENT, STRIP) \
 	do {	\
-		long virtualstart, realstart;	\
+		char *virtualstart, *realstart;	\
 		__asm__( "1:\n"	\
 				 "\tmove.l #1b, %0\n"	\
 				 "\tlea (1b:w,%%pc), %1" \
 				: "=r"(virtualstart) , "=a"(realstart) );	\
-		DISPLACEMENT = realstart - virtualstart;	\
+		DISPLACEMENT = STRIP(realstart) - virtualstart;	\
 	} while(0)
 
+#define RETRO68_GET_DISPLACEMENT(DISPLACEMENT) \
+	_RETRO68_GET_DISPLACEMENT(DISPLACEMENT, )
+
+#define RETRO68_GET_DISPLACEMENT_STRIP(DISPLACEMENT) \
+	_RETRO68_GET_DISPLACEMENT(DISPLACEMENT, StripAddress)
+
 #define RETRO68_CALL_UNRELOCATED(FUN,ARGS) \
 	do {	\
 		long displacement;	\
diff --git a/libretro/relocate.c b/libretro/relocate.c
index 97343b9210..d5bc3110f1 100644
--- a/libretro/relocate.c
+++ b/libretro/relocate.c
@@ -65,8 +65,9 @@ extern void __fini_section_end(void);
 
 
 
-static long headerVirtualAddress = -0x40;
+static long headerVirtualAddress = -sizeof(struct flat_hdr);
 static Ptr bssPtr = (Ptr) -1;
+static Handle codeHandle = NULL;
 
 #define ACCESS_DISPLACED(VAR) \
 	( * (typeof(&VAR)) ((char*)(&VAR) + displacement) )
@@ -74,9 +75,35 @@ static Ptr bssPtr = (Ptr) -1;
 void Retro68Relocate()
 {
 	long displacement;
-	RETRO68_GET_DISPLACEMENT(displacement);
+	RETRO68_GET_DISPLACEMENT_STRIP(displacement);
 
-	struct flat_hdr *header = (struct flat_hdr*) (ACCESS_DISPLACED(headerVirtualAddress) + displacement);
+	if(displacement == 0)
+	{
+		if(bssPtr != (Ptr) -1)
+		{
+			// this is not the first time, no relocations needed.
+			// should only happen for code resources.
+			HLock(codeHandle);
+			return;
+		}
+	}
+
+	long headerOldVirtualAddress = ACCESS_DISPLACED(headerVirtualAddress);
+	struct flat_hdr *header = (struct flat_hdr*) (headerOldVirtualAddress + displacement);
+	uint8_t *base = (uint8_t*) (header+1);
+
+	uint32_t headerOffsetInResource = ((uint32_t*)header)[-1];
+
+	if(headerOffsetInResource < 4096)
+		// Arbitrary magic number. We expect the offset to be small, just a few header bytes before it.
+	{
+		Handle h = RecoverHandle((Ptr) header - headerOffsetInResource);
+		if(MemError() == noErr && h)
+		{
+			HLock(h);
+			ACCESS_DISPLACED(codeHandle) = h;
+		}
+	}
 
 	SysEnvRec env;
 	long bss_size;
@@ -89,7 +116,8 @@ void Retro68Relocate()
 	long n = header->reloc_count;
 	long *relocs = (long*)( (char*)header + header->reloc_start );
 	long i;
-	long data_end = header->data_end - 0x40;
+	long data_end = header->data_end + headerOldVirtualAddress;
+	uint32_t flt_size = (uint32_t) header->data_end;
 	long bss_displacement = 0;
 
 	Ptr bss = ACCESS_DISPLACED(bssPtr);
@@ -105,17 +133,19 @@ void Retro68Relocate()
 
 	for(i = 0; i < n; i++)
 	{
-		uint8_t *addrPtr = (uint8_t*)(relocs[i] + displacement);
-		long addr;
+		uint8_t *addrPtr = base + relocs[i];
+		uint32_t addr;
 
-		addr = (addrPtr[0] << 24) | (addrPtr[1] << 16) | (addrPtr[2] << 8) | addrPtr[3];
+		//addr = *(uint32_t*)addrPtr;
+		addr = (((((addrPtr[0] << 8) | addrPtr[1]) << 8) | addrPtr[2]) << 8) | addrPtr[3];
 
-		addr += addr >= data_end ? bss_displacement : displacement;
+		addr += (uint32_t)(addr - headerOldVirtualAddress) >= flt_size ? bss_displacement : displacement;
 
-		addrPtr[0] = addr >> 24;
-		addrPtr[1] = addr >> 16;
-		addrPtr[2] = addr >> 8;
 		addrPtr[3] = addr;
+		addrPtr[2] = (addr >>= 8);
+		addrPtr[1] = (addr >>= 8);
+		addrPtr[0] = (addr >>= 8);
+		//*(uint32_t*)addrPtr = addr;
 	}
 
 	if(env.processor >= env68040)