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diff --git a/pygments/lexers/ml.py b/pygments/lexers/ml.py
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index f80d5bf..4fd2c58 100644
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--- a/pygments/lexers/ml.py
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+++ b/pygments/lexers/ml.py
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@@ -142,7 +142,7 @@ class SMLLexer(RegexLexer):
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             (r'#\s+(%s)' % symbolicid_re, Name.Label),
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             # Some reserved words trigger a special, local lexer state change
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             (r'\b(datatype|abstype)\b(?!\')', Keyword.Reserved, 'dname'),
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-            (r'(?=\b(exception)\b(?!\'))', Text, ('ename')),
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+            (r'\b(exception)\b(?!\')', Keyword.Reserved, 'ename'),
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             (r'\b(functor|include|open|signature|structure)\b(?!\')',
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              Keyword.Reserved, 'sname'),
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             (r'\b(type|eqtype)\b(?!\')', Keyword.Reserved, 'tname'),
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@@ -315,15 +315,14 @@ class SMLLexer(RegexLexer):
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         'ename': [
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             include('whitespace'),
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-            (r'(exception|and)\b(\s+)(%s)' % alphanumid_re,
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+            (r'(and\b)(\s+)(%s)' % alphanumid_re,
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              bygroups(Keyword.Reserved, Text, Name.Class)),
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-            (r'(exception|and)\b(\s*)(%s)' % symbolicid_re,
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+            (r'(and\b)(\s*)(%s)' % symbolicid_re,
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              bygroups(Keyword.Reserved, Text, Name.Class)),
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             (r'\b(of)\b(?!\')', Keyword.Reserved),
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+            (r'(%s)|(%s)' % (alphanumid_re, symbolicid_re), Name.Class),
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-            include('breakout'),
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-            include('core'),
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-            (r'\S+', Error),
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+            default('#pop'),
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         ],
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         'datcon': [