diff --git a/src/execution.cc b/src/execution.cc
index 0598ad718f..03541a8f3a 100644
--- a/src/execution.cc
+++ b/src/execution.cc
@@ -91,12 +91,10 @@ static Handle<Object> Invoke(bool construct,
   value->Verify();
 #endif
 
-  // Update the pending exception flag and return the value.
+  // Update the pending exception and external caught flag and return the value.
   *has_pending_exception = value->IsException();
   ASSERT(*has_pending_exception == Top::has_pending_exception());
-  if (*has_pending_exception) {
-    Top::setup_external_caught();
-  }
+  Top::propagate_external_caught();
 
   // If the pending exception is OutOfMemoryException set out_of_memory in
   // the global context.  Note: We have to mark the global context here
diff --git a/src/top.cc b/src/top.cc
index a78ba32b57..8df808e561 100644
--- a/src/top.cc
+++ b/src/top.cc
@@ -101,7 +101,7 @@ void Top::InitializeThreadLocal() {
   clear_pending_exception();
   clear_scheduled_exception();
   thread_local_.save_context_ = NULL;
-  thread_local_.catcher_ = NULL;
+  thread_local_.pending_external_caught_exception_ = false;
 }
 
 
@@ -607,7 +607,7 @@ Failure* Top::Throw(Object* exception, MessageLocation* location) {
 
 
 Failure* Top::ReThrow(Object* exception, MessageLocation* location) {
-  // Set the exception beeing re-thrown.
+  // Set the exception being re-thrown.
   set_pending_exception(exception);
   return Failure::Exception();
 }
@@ -789,9 +789,8 @@ void Top::DoThrow(Object* exception,
   // If the exception is caught externally, we store it in the
   // try/catch handler. The C code can find it later and process it if
   // necessary.
-  thread_local_.catcher_ = NULL;
+  thread_local_.pending_external_caught_exception_ = is_caught_externally;
   if (is_caught_externally) {
-    thread_local_.catcher_ = thread_local_.try_catch_handler_;
     thread_local_.try_catch_handler_->exception_ =
       reinterpret_cast<void*>(*exception_handle);
     if (!message_obj.is_null()) {
diff --git a/src/top.h b/src/top.h
index 866487c835..69fb7fa6c7 100644
--- a/src/top.h
+++ b/src/top.h
@@ -53,7 +53,9 @@ class ThreadLocalTop BASE_EMBEDDED {
   bool external_caught_exception_;
   v8::TryCatch* try_catch_handler_;
   SaveContext* save_context_;
-  v8::TryCatch* catcher_;
+  // Flag indicating that the try_catch_handler_ contains an exception to be
+  // caught.
+  bool pending_external_caught_exception_;
 
   // Stack.
   Address c_entry_fp_;  // the frame pointer of the top c entry frame
@@ -144,10 +146,16 @@ class Top {
     thread_local_.scheduled_exception_ = Heap::the_hole_value();
   }
 
-  static void setup_external_caught() {
-    thread_local_.external_caught_exception_ =
-        (thread_local_.catcher_ != NULL) &&
-        (Top::thread_local_.try_catch_handler_ == Top::thread_local_.catcher_);
+  // Propagate the external caught exception flag. If there is no external
+  // caught exception always clear the TryCatch handler as it might contain
+  // an exception object from a throw which was bypassed by a finally block
+  // doing an explicit return/break/continue.
+  static void propagate_external_caught() {
+    if (has_pending_exception()) {
+      thread_local_.external_caught_exception_ =
+          thread_local_.pending_external_caught_exception_;
+    }
+    thread_local_.pending_external_caught_exception_ = false;
   }
 
   // Tells whether the current context has experienced an out of memory