diff --git a/client/mysql.cc b/client/mysql.cc
index 8cbaf241bec..d3885645124 100644
--- a/client/mysql.cc
+++ b/client/mysql.cc
@@ -371,10 +371,16 @@ int main(int argc,char *argv[])
       !(status.line_buff=batch_readline_init(max_allowed_packet+512,stdin)))
   {
     free_defaults(defaults_argv);
+    my_end(0);
+    exit(1);
+  }
+  if (mysql_server_init(0, NULL, (char**) server_default_groups))
+  {
+    free_defaults(defaults_argv);
+    my_end(0);
     exit(1);
   }
   glob_buffer.realloc(512);
-  mysql_server_init(0, NULL, (char**) server_default_groups);
   completion_hash_init(&ht, 128);
   init_alloc_root(&hash_mem_root, 16384, 0);
   bzero((char*) &mysql, sizeof(mysql));
diff --git a/libmysqld/embedded_priv.h b/libmysqld/embedded_priv.h
index 1608f4ed4ad..d4316dff63f 100644
--- a/libmysqld/embedded_priv.h
+++ b/libmysqld/embedded_priv.h
@@ -28,5 +28,6 @@ void init_embedded_mysql(MYSQL *mysql, int client_flag, char *db);
 void *create_embedded_thd(int client_flag, char *db);
 int check_embedded_connection(MYSQL *mysql);
 void free_old_query(MYSQL *mysql);
+void embedded_get_error(MYSQL *mysql);
 extern MYSQL_METHODS embedded_methods;
 C_MODE_END
diff --git a/libmysqld/lib_sql.cc b/libmysqld/lib_sql.cc
index 09b03e38f2e..2bbca220db9 100644
--- a/libmysqld/lib_sql.cc
+++ b/libmysqld/lib_sql.cc
@@ -42,6 +42,22 @@ C_MODE_START
 #include "errmsg.h"
 #include <sql_common.h>
 
+void embedded_get_error(MYSQL *mysql)
+{
+  THD *thd=(THD *) mysql->thd;
+  NET *net= &mysql->net;
+  if ((net->last_errno= thd->net.last_errno))
+  {
+    memcpy(net->last_error, thd->net.last_error, sizeof(net->last_error));
+    memcpy(net->sqlstate, thd->net.sqlstate, sizeof(net->sqlstate));
+  }
+  else
+  {
+    net->last_error[0]= 0;
+    strmov(net->sqlstate, not_error_sqlstate);
+  }
+}
+
 static my_bool
 emb_advanced_command(MYSQL *mysql, enum enum_server_command command,
 		     const char *header, ulong header_length,
@@ -86,16 +102,7 @@ emb_advanced_command(MYSQL *mysql, enum enum_server_command command,
   if (!skip_check)
     result= thd->net.last_errno ? -1 : 0;
 
-  if ((net->last_errno= thd->net.last_errno))
-  {
-    memcpy(net->last_error, thd->net.last_error, sizeof(net->last_error));
-    memcpy(net->sqlstate, thd->net.sqlstate, sizeof(net->sqlstate));
-  }
-  else
-  {
-    net->last_error[0]= 0;
-    strmov(net->sqlstate, not_error_sqlstate);
-  }
+  embedded_get_error(mysql);
   mysql->server_status= thd->server_status;
   mysql->warning_count= ((THD*)mysql->thd)->total_warn_count;
   return result;
@@ -239,6 +246,7 @@ static void emb_free_embedded_thd(MYSQL *mysql)
     free_rows(thd->data);
   thread_count--;
   delete thd;
+  mysql->thd=0;
 }
 
 static const char * emb_read_statistics(MYSQL *mysql)
@@ -498,8 +506,7 @@ int check_embedded_connection(MYSQL *mysql)
   thd->host= (char*)my_localhost;
   thd->host_or_ip= thd->host;
   thd->user= my_strdup(mysql->user, MYF(0));
-  check_user(thd, COM_CONNECT, NULL, 0, thd->db, true);
-  return 0;
+  return check_user(thd, COM_CONNECT, NULL, 0, thd->db, true);
 }
 
 #else
diff --git a/libmysqld/libmysqld.c b/libmysqld/libmysqld.c
index 95f745aef5f..db9e828369d 100644
--- a/libmysqld/libmysqld.c
+++ b/libmysqld/libmysqld.c
@@ -232,6 +232,7 @@ mysql_real_connect(MYSQL *mysql,const char *host, const char *user,
   DBUG_RETURN(mysql);
 
 error:
+  embedded_get_error(mysql);
   DBUG_PRINT("error",("message: %u (%s)", mysql->net.last_errno,
 		      mysql->net.last_error));
   {
diff --git a/mysql-test/r/innodb.result b/mysql-test/r/innodb.result
index 981ef23c779..83d042cd279 100644
--- a/mysql-test/r/innodb.result
+++ b/mysql-test/r/innodb.result
@@ -1595,3 +1595,26 @@ t2	CREATE TABLE `t2` (
   CONSTRAINT `t2_ibfk_2` FOREIGN KEY (`b`) REFERENCES `t1` (`id`)
 ) ENGINE=InnoDB DEFAULT CHARSET=latin1
 drop table t2, t1;
+show status like "binlog_cache_use";
+Variable_name	Value
+Binlog_cache_use	24
+show status like "binlog_cache_disk_use";
+Variable_name	Value
+Binlog_cache_disk_use	0
+create table t1 (a int) engine=innodb;
+show status like "binlog_cache_use";
+Variable_name	Value
+Binlog_cache_use	25
+show status like "binlog_cache_disk_use";
+Variable_name	Value
+Binlog_cache_disk_use	1
+begin;
+delete from t1;
+commit;
+show status like "binlog_cache_use";
+Variable_name	Value
+Binlog_cache_use	26
+show status like "binlog_cache_disk_use";
+Variable_name	Value
+Binlog_cache_disk_use	1
+drop table t1;
diff --git a/mysql-test/r/rpl_relayrotate.result b/mysql-test/r/rpl_relayrotate.result
index 96ec06a69aa..bf9bbbb9b93 100644
--- a/mysql-test/r/rpl_relayrotate.result
+++ b/mysql-test/r/rpl_relayrotate.result
@@ -16,19 +16,4 @@ master_pos_wait('master-bin.001',3000)>=0
 select * from t1 where a=8000;
 a
 8000
-show status like "binlog_cache_use";
-Variable_name	Value
-Binlog_cache_use	1
-show status like "binlog_cache_disk_use";
-Variable_name	Value
-Binlog_cache_disk_use	1
-begin;
-delete from t1;
-commit;
-show status like "binlog_cache_use";
-Variable_name	Value
-Binlog_cache_use	2
-show status like "binlog_cache_disk_use";
-Variable_name	Value
-Binlog_cache_disk_use	1
 drop table t1;
diff --git a/mysql-test/t/rpl_relayrotate-master.opt b/mysql-test/t/innodb-master.opt
similarity index 100%
rename from mysql-test/t/rpl_relayrotate-master.opt
rename to mysql-test/t/innodb-master.opt
diff --git a/mysql-test/t/innodb.test b/mysql-test/t/innodb.test
index 47e82db2dc4..e0cc96ccb32 100644
--- a/mysql-test/t/innodb.test
+++ b/mysql-test/t/innodb.test
@@ -1106,4 +1106,37 @@ show create table t2;
 drop table t2, t1;
 
 
+#
+# Let us test binlog_cache_use and binlog_cache_disk_use status vars.
+# Actually this test has nothing to do with innodb per se, it just requires
+# transactional table. 
+#
+show status like "binlog_cache_use";
+show status like "binlog_cache_disk_use";
 
+create table t1 (a int) engine=innodb;
+
+# Now we are going to create transaction which is long enough so its 
+# transaction binlog will be flushed to disk...
+let $1=2000;
+disable_query_log;
+begin;
+while ($1)
+{
+ eval insert into t1 values( $1 );
+ dec $1;
+}
+commit;
+enable_query_log;
+show status like "binlog_cache_use";
+show status like "binlog_cache_disk_use";
+
+# Transaction which should not be flushed to disk and so should not
+# increase binlog_cache_disk_use.
+begin;
+delete from t1;
+commit;
+show status like "binlog_cache_use";
+show status like "binlog_cache_disk_use";
+
+drop table t1;
diff --git a/mysql-test/t/rpl_relayrotate.test b/mysql-test/t/rpl_relayrotate.test
index ca3bff81608..46e6f1bd157 100644
--- a/mysql-test/t/rpl_relayrotate.test
+++ b/mysql-test/t/rpl_relayrotate.test
@@ -60,22 +60,6 @@ select * from t1 where a=8000;
 
 connection master;
 
-# binlog_cache_use and binlog_cache_disk_use status vars test
-# This test uses the previous test. Namely, it needs the long 
-# transaction that adds 8000 lines to the t1 table.
-
-show status like "binlog_cache_use";
-show status like "binlog_cache_disk_use";
-
-# transaction which should not be flushed to disk and so should not
-# increase binlog_cache_disk_use
-begin;
-delete from t1;
-commit;
-
-show status like "binlog_cache_use";
-show status like "binlog_cache_disk_use";
-
 # The following DROP is a very important cleaning task:
 # imagine the next test is run with --skip-innodb: it will do
 # DROP TABLE IF EXISTS t1; but this will delete the frm and leave
diff --git a/sql/handler.cc b/sql/handler.cc
index 9acd55db0b1..bc86241bd00 100644
--- a/sql/handler.cc
+++ b/sql/handler.cc
@@ -743,7 +743,7 @@ int ha_delete_table(enum db_type table_type, const char *path)
   {
     /* Ensure that table handler get path in lower case */
     strmov(tmp_path, path);
-    my_casedn_str(system_charset_info, tmp_path);
+    my_casedn_str(files_charset_info, tmp_path);
     path= tmp_path;
   }
   int error=file->delete_table(path);
@@ -1247,7 +1247,7 @@ int ha_create_table(const char *name, HA_CREATE_INFO *create_info,
   {
     /* Ensure that handler gets name in lower case */
     strmov(name_buff, name);
-    my_casedn_str(system_charset_info, name_buff);
+    my_casedn_str(files_charset_info, name_buff);
     name= name_buff;
   }
 
diff --git a/sql/sql_acl.cc b/sql/sql_acl.cc
index fbd47d4954d..25ff4c5676b 100644
--- a/sql/sql_acl.cc
+++ b/sql/sql_acl.cc
@@ -953,7 +953,7 @@ ulong acl_get(const char *host, const char *ip,
   end=strmov((tmp_db=strmov(strmov(key, ip ? ip : "")+1,user)+1),db);
   if (lower_case_table_names)
   {
-    my_casedn_str(&my_charset_latin1, tmp_db);
+    my_casedn_str(files_charset_info, tmp_db);
     db=tmp_db;
   }
   key_length=(uint) (end-key);
@@ -1733,8 +1733,8 @@ GRANT_TABLE::GRANT_TABLE(const char *h, const char *d,const char *u,
   tname= strdup_root(&memex,t);
   if (lower_case_table_names)
   {
-    my_casedn_str(&my_charset_latin1, db);
-    my_casedn_str(&my_charset_latin1, tname);
+    my_casedn_str(files_charset_info, db);
+    my_casedn_str(files_charset_info, tname);
   }
   key_length =(uint) strlen(d)+(uint) strlen(u)+(uint) strlen(t)+3;
   hash_key = (char*) alloc_root(&memex,key_length);
@@ -1768,8 +1768,8 @@ GRANT_TABLE::GRANT_TABLE(TABLE *form, TABLE *col_privs)
   }
   if (lower_case_table_names)
   {
-    my_casedn_str(&my_charset_latin1, db);
-    my_casedn_str(&my_charset_latin1, tname);
+    my_casedn_str(files_charset_info, db);
+    my_casedn_str(files_charset_info, tname);
   }
   key_length = ((uint) strlen(db) + (uint) strlen(user) +
                 (uint) strlen(tname) + 3);
@@ -2416,7 +2416,7 @@ int mysql_grant(THD *thd, const char *db, List <LEX_USER> &list,
   if (lower_case_table_names && db)
   {
     strmov(tmp_db,db);
-    my_casedn_str(&my_charset_latin1, tmp_db);
+    my_casedn_str(files_charset_info, tmp_db);
     db=tmp_db;
   }
 
diff --git a/sql/sql_cache.cc b/sql/sql_cache.cc
index d7d4219c7fd..b9fe61ac48a 100644
--- a/sql/sql_cache.cc
+++ b/sql/sql_cache.cc
@@ -1512,13 +1512,28 @@ ulong Query_cache::init_cache()
   VOID(hash_init(&queries, &my_charset_bin, def_query_hash_size, 0, 0,
 		 query_cache_query_get_key, 0, 0));
 #ifndef FN_NO_CASE_SENCE
+  /*
+    If lower_case_table_names!=0 then db and table names are already 
+    converted to lower case and we can use binary collation for their 
+    comparison (no matter if file system case sensitive or not).
+    If we have case-sensitive file system (like on most Unixes) and
+    lower_case_table_names == 0 then we should distinguish my_table
+    and MY_TABLE cases and so again can use binary collation.
+  */
   VOID(hash_init(&tables, &my_charset_bin, def_table_hash_size, 0, 0,
 		 query_cache_table_get_key, 0, 0));
 #else
-  // windows, OS/2 or other case insensitive file names work around
+  /*
+    On windows, OS/2, MacOS X with HFS+ or any other case insensitive 
+    file system if lower_case_table_names!=0 we have same situation as 
+    in previous case, but if lower_case_table_names==0 then we should 
+    not distinguish cases (to be compatible in behavior with underlaying 
+    file system) and so should use case insensitive collation for 
+    comparison.
+  */
   VOID(hash_init(&tables,
 		 lower_case_table_names ? &my_charset_bin :
-		 system_charset_info,
+		 files_charset_info,
 		 def_table_hash_size, 0, 0,query_cache_table_get_key, 0, 0));
 #endif
 
diff --git a/sql/sql_db.cc b/sql/sql_db.cc
index bddaebdc0f2..39c8c00898d 100644
--- a/sql/sql_db.cc
+++ b/sql/sql_db.cc
@@ -366,7 +366,7 @@ int mysql_rm_db(THD *thd,char *db,bool if_exists, bool silent)
   {
     /* Convert database to lower case */
     strmov(tmp_db, db);
-    my_casedn_str(system_charset_info, tmp_db);
+    my_casedn_str(files_charset_info, tmp_db);
     db= tmp_db;
   }
 
diff --git a/sql/sql_show.cc b/sql/sql_show.cc
index 80634c68ac7..4fb85d9bab7 100644
--- a/sql/sql_show.cc
+++ b/sql/sql_show.cc
@@ -422,7 +422,7 @@ mysql_find_files(THD *thd,List<char> *files, const char *db,const char *path,
       {
 	if (lower_case_table_names)
 	{
-	  if (wild_case_compare(system_charset_info,file->name,wild))
+	  if (wild_case_compare(files_charset_info, file->name, wild))
 	    continue;
 	}
 	else if (wild_compare(file->name,wild,0))
diff --git a/sql/sql_table.cc b/sql/sql_table.cc
index e017bc7e6b5..383165824d7 100644
--- a/sql/sql_table.cc
+++ b/sql/sql_table.cc
@@ -1395,11 +1395,11 @@ mysql_rename_table(enum db_type base,
   {
     /* Table handler expects to get all file names as lower case */
     strmov(tmp_from, old_name);
-    my_casedn_str(system_charset_info, tmp_from);
+    my_casedn_str(files_charset_info, tmp_from);
     old_name= tmp_from;
 
     strmov(tmp_to, new_name);
-    my_casedn_str(system_charset_info, tmp_to);
+    my_casedn_str(files_charset_info, tmp_to);
     new_name= tmp_to;
   }
   my_snprintf(from, sizeof(from), "%s/%s/%s",
@@ -2514,10 +2514,10 @@ int mysql_alter_table(THD *thd,char *new_db, char *new_name,
     {
       if (lower_case_table_names != 2)
       {
-	my_casedn_str(system_charset_info, new_name_buff);
+	my_casedn_str(files_charset_info, new_name_buff);
 	new_alias= new_name;			// Create lower case table name
       }
-      my_casedn_str(system_charset_info, new_name);
+      my_casedn_str(files_charset_info, new_name);
     }
     if (new_db == db &&
 	!my_strcasecmp(table_alias_charset, new_name_buff, table_name))
@@ -2880,7 +2880,7 @@ int mysql_alter_table(THD *thd,char *new_db, char *new_name,
 	      current_pid, thd->thread_id);
   /* Safety fix for innodb */
   if (lower_case_table_names)
-    my_casedn_str(system_charset_info, tmp_name);
+    my_casedn_str(files_charset_info, tmp_name);
   create_info->db_type=new_db_type;
   if (!create_info->comment)
     create_info->comment=table->comment;