diff --git a/check.t b/check.t
index e3b363a..b13e92c 100644
--- a/check.t
+++ b/check.t
@@ -1,4 +1,4 @@
-# $MirOS: src/bin/mksh/check.t,v 1.591 2013/02/10 23:36:21 tg Exp $
+# $MirOS: src/bin/mksh/check.t,v 1.592 2013/02/10 23:59:23 tg Exp $
 # $OpenBSD: bksl-nl.t,v 1.2 2001/01/28 23:04:56 niklas Exp $
 # $OpenBSD: history.t,v 1.5 2001/01/28 23:04:56 niklas Exp $
 # $OpenBSD: read.t,v 1.3 2003/03/10 03:48:16 david Exp $
@@ -29,7 +29,7 @@
 # http://www.freebsd.org/cgi/cvsweb.cgi/src/tools/regression/bin/test/regress.sh?rev=HEAD
 
 expected-stdout:
-	@(#)MIRBSD KSH R41 2013/01/19
+	@(#)MIRBSD KSH R42 2013/02/10
 description:
 	Check version of shell.
 stdin:
@@ -38,7 +38,7 @@ name: KSH_VERSION
 category: shell:legacy-no
 ---
 expected-stdout:
-	@(#)LEGACY KSH R41 2013/01/19
+	@(#)LEGACY KSH R42 2013/02/10
 description:
 	Check version of legacy shell.
 stdin:
@@ -5754,6 +5754,21 @@ expected-stdout:
 	
 	Stop in WD/zd/a (line 2 of Makefile).
 ---
+name: exit-err-7
+description:
+	"set -e" regression (LP#1104543)
+stdin:
+	set -e
+	bla() {
+		[ -x $PWD/nonexistant ] && $PWD/nonexistant
+	}
+	echo x
+	bla
+	echo y$?
+expected-stdout:
+	x
+expected-exit: 1
+---
 name: exit-enoent-1
 description:
 	SUSv4 says that the shell should exit with 126/127 in some situations
diff --git a/exec.c b/exec.c
index 8062f94..3643456 100644
--- a/exec.c
+++ b/exec.c
@@ -23,7 +23,7 @@
 
 #include "sh.h"
 
-__RCSID("$MirOS: src/bin/mksh/exec.c,v 1.113 2013/01/19 19:47:10 tg Exp $");
+__RCSID("$MirOS: src/bin/mksh/exec.c,v 1.114 2013/02/10 23:59:25 tg Exp $");
 
 #ifndef MKSH_DEFAULT_EXECSHELL
 #define MKSH_DEFAULT_EXECSHELL	"/bin/sh"
@@ -748,8 +748,7 @@ comexec(struct op *t, struct tbl * volatile tp, const char **ap,
 
 		e->type = E_FUNC;
 		if (!(i = kshsetjmp(e->jbuf))) {
-			/* seems odd to pass XERROK here, but AT&T ksh does */
-			exstat = execute(tp->val.t, flags & XERROK, xerrok) & 0xFF;
+			execute(tp->val.t, 0, NULL);
 			i = LRETURN;
 		}
 		kshname = old_kshname;
diff --git a/sh.h b/sh.h
index 4570573..0f6846e 100644
--- a/sh.h
+++ b/sh.h
@@ -164,9 +164,9 @@
 #endif
 
 #ifdef EXTERN
-__RCSID("$MirOS: src/bin/mksh/sh.h,v 1.633 2013/02/10 21:17:07 tg Exp $");
+__RCSID("$MirOS: src/bin/mksh/sh.h,v 1.634 2013/02/10 23:59:28 tg Exp $");
 #endif
-#define MKSH_VERSION "R41 2013/01/19"
+#define MKSH_VERSION "R42 2013/02/10"
 
 /* arithmetic types: C implementation */
 #if !HAVE_CAN_INTTYPES