diff --git a/src/ast/proofs/proof_utils.h b/src/ast/proofs/proof_utils.h
index 729a30eb0..e3ad8d06e 100644
--- a/src/ast/proofs/proof_utils.h
+++ b/src/ast/proofs/proof_utils.h
@@ -164,10 +164,12 @@ public:
                 // skip (asserted m_aux)
                 else if (m.is_asserted(arg, a) && a == m_aux.get()) {
                     dirty = true;
+                    args.push_back(m.mk_true_proof());
                 }
                 // skip (hypothesis m_aux)
                 else if (m.is_hypothesis(arg, a) && a == m_aux.get()) {
                     dirty = true;
+                    args.push_back(m.mk_true_proof());
                 } else if (is_app(arg) && cache.find(to_app(arg), r)) {
                     dirty |= (arg != r);
                     args.push_back(r);
@@ -188,14 +190,18 @@ public:
             app_ref newp(m);
             if (!dirty) { newp = p; }
             else if (m.is_unit_resolution(p)) {
-                if (args.size() == 2)
-                    // unit resolution with m_aux that got collapsed to nothing
-                { newp = to_app(args.get(0)); }
+                ptr_buffer<proof> parents;
+                for (unsigned i = 0, sz = args.size() - 1; i < sz; ++i) {
+                    app *arg = to_app(args.get(i));
+                    if (!m.is_true(m.get_fact(arg)))
+                        parents.push_back(arg);
+                }
+                // unit resolution that collapsed to nothing
+                if (parents.size() == 1) {
+                    newp = parents.get(0);
+                }
                 else {
-                    ptr_vector<proof> parents;
-                    for (unsigned i = 0, sz = args.size() - 1; i < sz; ++i)
-                    { parents.push_back(to_app(args.get(i))); }
-                    SASSERT(parents.size() == args.size() - 1);
+                    // rebuild unit resolution
                     newp = m.mk_unit_resolution(parents.size(), parents.c_ptr());
                     // XXX the old and new facts should be
                     // equivalent. The test here is much
@@ -203,9 +209,11 @@ public:
                     SASSERT(m.get_fact(newp) == args.back());
                     pinned.push_back(newp);
                 }
-            } else if (matches_fact(args, a)) {
+            }
+            else if (matches_fact(args, a)) {
                 newp = to_app(a);
-            } else {
+            }
+            else {
                 expr_ref papp(m);
                 mk_app(p->get_decl(), args, papp);
                 newp = to_app(papp.get());
diff --git a/src/muz/base/dl_context.cpp b/src/muz/base/dl_context.cpp
index d851ec586..1c9abf78c 100644
--- a/src/muz/base/dl_context.cpp
+++ b/src/muz/base/dl_context.cpp
@@ -307,6 +307,10 @@ namespace datalog {
     bool context::instantiate_quantifiers() const { return m_params->xform_instantiate_quantifiers(); }
     bool context::array_blast() const { return m_params->xform_array_blast(); }
     bool context::array_blast_full() const { return m_params->xform_array_blast_full(); }
+    bool context::elim_term_ite() const {return m_params->xform_elim_term_ite();}
+    unsigned context::blast_term_ite_inflation() const {
+        return m_params->xform_elim_term_ite_inflation();
+    }
 
 
     void context::register_finite_sort(sort * s, sort_kind k) {
diff --git a/src/muz/base/dl_context.h b/src/muz/base/dl_context.h
index 6e6bc80dc..23926c3d1 100644
--- a/src/muz/base/dl_context.h
+++ b/src/muz/base/dl_context.h
@@ -280,6 +280,8 @@ namespace datalog {
         bool xform_coi() const;
         bool array_blast() const;
         bool array_blast_full() const;
+        bool elim_term_ite() const;
+        unsigned blast_term_ite_inflation() const;
 
         void register_finite_sort(sort * s, sort_kind k);
 
diff --git a/src/muz/base/fp_params.pyg b/src/muz/base/fp_params.pyg
index 981b99de7..ee842d28e 100644
--- a/src/muz/base/fp_params.pyg
+++ b/src/muz/base/fp_params.pyg
@@ -132,10 +132,12 @@ def_module_params('fp',
                           ('spacer.use_derivations', BOOL, True, 'SPACER: using derivation mechanism to cache intermediate results for non-linear rules'),
                           ('xform.array_blast', BOOL, False, "try to eliminate local array terms using Ackermannization -- some array terms may remain"),
 	                  ('xform.array_blast_full', BOOL, False, "eliminate all local array variables by QE"),
+                          ('xform.elim_term_ite', BOOL, False, 'Eliminate term-ite expressions'),
+                          ('xform.elim_term_ite.inflation', UINT, 3, 'Maximum inflation for non-Boolean ite-terms blasting: 0 (none), k (multiplicative)'),
                           ('spacer.propagate', BOOL, True, 'Enable propagate/pushing phase'),
                           ('spacer.max_level', UINT, UINT_MAX, "Maximum level to explore"),
                           ('spacer.elim_aux', BOOL, True, "Eliminate auxiliary variables in reachability facts"),
-                          ('spacer.blast_term_ite', BOOL, True, "Expand non-Boolean ite-terms"),
+                          ('spacer.blast_term_ite_inflation', UINT, 3, 'Maximum inflation for non-Boolean ite-terms expansion: 0 (none), k (multiplicative)'),
                           ('spacer.reach_dnf', BOOL, True, "Restrict reachability facts to DNF"),
                           ('bmc.linear_unrolling_depth', UINT, UINT_MAX, "Maximal level to explore"),
                           ('spacer.iuc.split_farkas_literals', BOOL, False, "Split Farkas literals"),
diff --git a/src/muz/spacer/spacer_context.cpp b/src/muz/spacer/spacer_context.cpp
index 07dc1a372..693812a31 100644
--- a/src/muz/spacer/spacer_context.cpp
+++ b/src/muz/spacer/spacer_context.cpp
@@ -948,7 +948,7 @@ void pred_transformer::add_lemma_core(lemma* lemma, bool ground_only)
           << " " << head ()->get_name ()
           << " " << mk_pp (l, m) << "\n";);
 
-    STRACE ("spacer.expand-add",
+    STRACE ("spacer_progress",
             tout << "** add-lemma: " << pp_level (lvl) << " "
             << head ()->get_name () << " "
             << mk_epp (l, m) << "\n";
@@ -1300,7 +1300,7 @@ bool pred_transformer::is_qblocked (pob &n) {
     //     solver->get_itp_core(core);
     //     expr_ref c(m);
     //     c = mk_and(core);
-    //     STRACE("spacer.expand-add", tout << "core: " << mk_epp(c,m) << "\n";);
+    //     STRACE("spacer_progress", tout << "core: " << mk_epp(c,m) << "\n";);
     // }
     return res == l_false;
 }
@@ -1683,7 +1683,10 @@ void pred_transformer::init_rule(decl2rel const& pts, datalog::rule const& rule)
     // rewrite and simplify
     th_rewriter rw(m);
     rw(trans);
-    if (ctx.blast_term_ite()) {blast_term_ite(trans, 3); rw(trans);}
+    if (ctx.blast_term_ite_inflation() > 0) {
+        blast_term_ite(trans, ctx.blast_term_ite_inflation());
+        rw(trans);
+    }
     TRACE("spacer_init_rule", tout << mk_pp(trans, m) << "\n";);
 
     // allow quantifiers in init rule
@@ -2265,7 +2268,7 @@ void context::updt_params() {
     m_use_euf_gen = m_params.spacer_use_euf_gen();
     m_use_ctp = m_params.spacer_ctp();
     m_use_inc_clause = m_params.spacer_use_inc_clause();
-    m_blast_term_ite = m_params.spacer_blast_term_ite();
+    m_blast_term_ite_inflation = m_params.spacer_blast_term_ite_inflation();
     m_use_ind_gen = m_params.spacer_use_inductive_generalizer();
     m_use_array_eq_gen = m_params.spacer_use_array_eq_generalizer();
     m_validate_lemmas = m_params.spacer_validate_lemmas();
@@ -3059,7 +3062,7 @@ lbool context::solve_core (unsigned from_lvl)
         m_stats.m_max_depth = std::max(m_stats.m_max_depth, lvl);
         IF_VERBOSE(1,verbose_stream() << "Entering level "<< lvl << "\n";);
 
-        STRACE("spacer.expand-add", tout << "\n* LEVEL " << lvl << "\n";);
+        STRACE("spacer_progress", tout << "\n* LEVEL " << lvl << "\n";);
 
         IF_VERBOSE(1,
                    if (m_params.print_statistics ()) {
@@ -3310,7 +3313,7 @@ lbool context::expand_pob(pob& n, pob_ref_buffer &out)
            << " fvsz: " << n.get_free_vars_size() << "\n"
            << mk_pp(n.post(), m) << "\n";);
 
-    STRACE ("spacer.expand-add",
+    STRACE ("spacer_progress",
             tout << "** expand-pob: " << n.pt().head()->get_name()
             << " level: " << n.level()
             << " depth: " << (n.depth () - m_pob_queue.min_depth ()) << "\n"
@@ -3356,7 +3359,7 @@ lbool context::expand_pob(pob& n, pob_ref_buffer &out)
     }
 
     if (/* XXX noop */ n.pt().is_qblocked(n)) {
-        STRACE("spacer.expand-add",
+        STRACE("spacer_progress",
                tout << "This pob can be blocked by instantiation\n";);
     }
 
@@ -3551,7 +3554,7 @@ bool context::propagate(unsigned min_prop_lvl,
     if (m_simplify_formulas_pre) {
         simplify_formulas();
     }
-    STRACE ("spacer.expand-add", tout << "Propagating\n";);
+    STRACE ("spacer_progress", tout << "Propagating\n";);
 
     IF_VERBOSE (1, verbose_stream () << "Propagating: " << std::flush;);
 
diff --git a/src/muz/spacer/spacer_context.h b/src/muz/spacer/spacer_context.h
index 36f898ed1..48c27f96d 100644
--- a/src/muz/spacer/spacer_context.h
+++ b/src/muz/spacer/spacer_context.h
@@ -940,7 +940,6 @@ class context {
     bool                 m_use_euf_gen;
     bool                 m_use_ctp;
     bool                 m_use_inc_clause;
-    bool                 m_blast_term_ite;
     bool                 m_use_ind_gen;
     bool                 m_use_array_eq_gen;
     bool                 m_validate_lemmas;
@@ -962,6 +961,7 @@ class context {
     unsigned             m_push_pob_max_depth;
     unsigned             m_max_level;
     unsigned             m_restart_initial_threshold;
+    unsigned             m_blast_term_ite_inflation;
     scoped_ptr_vector<spacer_callback> m_callbacks;
     json_marshaller      m_json_marshaller;
 
@@ -1036,7 +1036,7 @@ public:
     bool simplify_pob() {return m_simplify_pob;}
     bool use_ctp() {return m_use_ctp;}
     bool use_inc_clause() {return m_use_inc_clause;}
-    bool blast_term_ite() {return m_blast_term_ite;}
+    unsigned blast_term_ite_inflation() {return m_blast_term_ite_inflation;}
     bool elim_aux() {return m_elim_aux;}
     bool reach_dnf() {return m_reach_dnf;}
 
diff --git a/src/muz/spacer/spacer_pdr.cpp b/src/muz/spacer/spacer_pdr.cpp
index 4e6b37a0a..04b001151 100644
--- a/src/muz/spacer/spacer_pdr.cpp
+++ b/src/muz/spacer/spacer_pdr.cpp
@@ -236,7 +236,7 @@ lbool context::gpdr_solve_core() {
     for (lvl = 0; lvl < max_level; ++lvl) {
         checkpoint();
         IF_VERBOSE(1,verbose_stream() << "GPDR Entering level "<< lvl << "\n";);
-        STRACE("spacer.expand-add", tout << "\n* LEVEL " << lvl << "\n";);
+        STRACE("spacer_progress", tout << "\n* LEVEL " << lvl << "\n";);
         m_expanded_lvl = infty_level();
         m_stats.m_max_query_lvl = lvl;
         if (gpdr_check_reachability(lvl, ms)) {return l_true;}
diff --git a/src/muz/transforms/CMakeLists.txt b/src/muz/transforms/CMakeLists.txt
index 5e8829d42..e92aa1c2f 100644
--- a/src/muz/transforms/CMakeLists.txt
+++ b/src/muz/transforms/CMakeLists.txt
@@ -1,3 +1,4 @@
+
 z3_add_component(transforms
   SOURCES
     dl_mk_array_blast.cpp
@@ -23,6 +24,7 @@ z3_add_component(transforms
     dl_transforms.cpp
     dl_mk_array_eq_rewrite.cpp
     dl_mk_array_instantiation.cpp
+    dl_mk_elim_term_ite.cpp
   COMPONENT_DEPENDENCIES
     dataflow
     hilbert
diff --git a/src/muz/transforms/dl_mk_elim_term_ite.cpp b/src/muz/transforms/dl_mk_elim_term_ite.cpp
new file mode 100644
index 000000000..f0d9a8843
--- /dev/null
+++ b/src/muz/transforms/dl_mk_elim_term_ite.cpp
@@ -0,0 +1,203 @@
+/*++
+Copyright (c) 2018 Arie Gurfinkel
+
+Module Name:
+
+    dl_mk_elim_term_ite.h
+
+Abstract:
+
+   Remove term-ite expressions from the rules
+
+Author:
+
+    Arie Gurfinkel (agurfinkel)
+
+Revision History:
+
+--*/
+
+#include "muz/transforms/dl_mk_elim_term_ite.h"
+#include "tactic/core/blast_term_ite_tactic.h"
+#include "ast/ast_util.h"
+#include "ast/expr_abstract.h"
+#include "tactic/tactic.h"
+#include "tactic/core/elim_term_ite_tactic.h"
+
+namespace {
+    struct uninterp_const_collector {
+        app_ref_vector &m_consts;
+        uninterp_const_collector(app_ref_vector &v) : m_consts(v) {}
+        void operator()(var *v) {}
+        void operator()(quantifier *n) {}
+        void operator()(expr *a){}
+        void operator()(app *a){
+            if (is_uninterp_const(a)) {m_consts.push_back(a);};
+        }
+    };
+
+    void collect_uninterp_consts(expr *e, app_ref_vector &v) {
+        uninterp_const_collector c(v);
+        quick_for_each_expr(c, e);
+    }
+
+    struct term_ite_proc {
+        class found{};
+        ast_manager &m;
+        term_ite_proc(ast_manager &m) : m(m) {}
+        void operator()(var *v) {}
+        void operator()(quantifier *n) {}
+        void operator()(expr *a){}
+        void operator()(app *a){
+            if (m.is_term_ite(a)) throw found();
+        }
+    };
+
+    bool has_term_ite(expr *e, ast_manager& m) {
+        term_ite_proc f(m);
+        try {
+            quick_for_each_expr(f, e);
+        } catch (term_ite_proc::found) {
+            return true;
+        }
+        return false;
+    }
+    bool has_term_ite(expr_ref &e) { return has_term_ite(e, e.m());}
+
+}
+namespace datalog {
+    mk_elim_term_ite::mk_elim_term_ite(context & ctx, unsigned priority) :
+        rule_transformer::plugin(priority, false),
+        m_ctx(ctx),
+        m(ctx.get_manager()),
+        rm(ctx.get_rule_manager()),
+        m_ground(m) {}
+
+    mk_elim_term_ite::~mk_elim_term_ite() {}
+
+    expr_ref mk_elim_term_ite::ground(expr_ref &e) {
+        expr_free_vars fv;
+        fv(e);
+        if (m_ground.size() < fv.size())
+            m_ground.resize(fv.size());
+        for (unsigned i = 0, sz = fv.size(); i < sz; ++i) {
+            if (fv[i] && !m_ground.get(i))
+                m_ground[i] = m.mk_fresh_const("c", fv[i]);
+        }
+
+        var_subst vsub(m, false);
+        return vsub(e, m_ground.size(), m_ground.c_ptr());
+    }
+
+    bool mk_elim_term_ite::elim(rule &r, rule_set &new_rules){
+        m_ground.reset();
+
+        th_rewriter rw(m);
+        unsigned utsz = r.get_uninterpreted_tail_size();
+        unsigned tsz = r.get_tail_size();
+        expr_ref_vector new_conjs(m);
+        expr_ref tmp(m);
+
+
+        for (unsigned i = utsz; i < tsz; ++i)
+            new_conjs.push_back(r.get_tail(i));
+        flatten_and(new_conjs);
+
+        expr_ref fml1(m), fml2(m), body(m), head(m);
+
+        // blast ite
+        body = m.mk_and(new_conjs.size(), new_conjs.c_ptr());
+        if (!has_term_ite(body)) {
+            TRACE("dl_term_ite", tout << "No term-ite, skipping a rule\n";);
+            new_rules.add_rule(&r);
+            return false;
+        }
+        new_conjs.reset();
+        blast_term_ite(body, m_ctx.blast_term_ite_inflation());
+        // simplify body
+        rw(body);
+
+        if (!has_term_ite(body)) {
+            head = r.get_head();
+
+            fml2 = m.mk_implies(body, head);
+            proof_ref p(m);
+            rm.mk_rule(fml2, p, new_rules, r.name());
+            rm.mk_rule_rewrite_proof(r, *new_rules.last());
+            TRACE("dl_term_ite", tout << "No term-ite after blast_term_ite\n";);
+            return true;
+        }
+
+        TRACE("dl_term_ite",
+              tout << "Rule has term-ite after blasting, starting elimination\n";);
+        body = ground(body);
+        // elim ite
+        tactic_ref elim_term_ite = mk_elim_term_ite_tactic(m);
+        goal_ref goal = alloc(class goal, m);
+        goal_ref_buffer result;
+        flatten_and(body, new_conjs);
+        for (auto *e : new_conjs) {
+            goal->assert_expr(e);
+        }
+        unsigned sz = goal->num_exprs();
+        (*elim_term_ite)(goal, result);
+        if (result.size() == 1) {
+            goal_ref new_goal = result[0];
+            if (new_goal->num_exprs() != sz) {
+                new_conjs.reset();
+                new_goal->get_formulas(new_conjs);
+                flatten_and(new_conjs);
+            }
+        }
+
+        expr_ref_vector conjs(m);
+        for (unsigned i = 0; i < utsz; ++i) {
+            tmp = r.get_tail(i);
+            tmp = ground(tmp);
+            conjs.push_back(tmp);
+        }
+        conjs.append(new_conjs);
+
+        body = mk_and(conjs);
+        rw(body);
+
+        head = r.get_head();
+        head = ground(head);
+
+        fml2 = m.mk_implies(body, head);
+        SASSERT(!has_term_ite(fml2));
+        app_ref_vector consts(m);
+        collect_uninterp_consts(fml2, consts);
+        fml2 = mk_forall(m, consts.size(), consts.c_ptr(), fml2);
+        proof_ref p(m);
+        rm.mk_rule(fml2, p, new_rules, r.name());
+        rm.mk_rule_rewrite_proof(r, *new_rules.last());
+        TRACE("dl_term_ite", tout << "New rule: " << fml2 << "\n";);
+
+        return true;
+    }
+
+
+
+    rule_set * mk_elim_term_ite::operator()(rule_set const & source) {
+        if (!m_ctx.elim_term_ite ()) {return nullptr;}
+
+        rule_set* rules = alloc(rule_set, m_ctx);
+        rules->inherit_predicates(source);
+        bool change = false;
+        for (auto *rule : source) {
+            if (m_ctx.canceled()) {
+                change = false;
+                break;
+            }
+            change |= elim(*rule, *rules);
+        }
+        if (!change) {
+            dealloc(rules);
+            rules = nullptr;
+        }
+        return rules;
+    }
+
+
+}
diff --git a/src/muz/transforms/dl_mk_elim_term_ite.h b/src/muz/transforms/dl_mk_elim_term_ite.h
new file mode 100644
index 000000000..231697a0b
--- /dev/null
+++ b/src/muz/transforms/dl_mk_elim_term_ite.h
@@ -0,0 +1,41 @@
+/*++
+Copyright (c) 2018 Arie Gurfinkel
+
+Module Name:
+
+    dl_mk_elim_term_ite.h
+
+Abstract:
+
+   Remove term-ite expressions from the rules
+
+Author:
+
+    Arie Gurfinkel (agurfinkel)
+
+Revision History:
+
+--*/
+#pragma once
+
+#include "muz/base/dl_context.h"
+#include "muz/base/dl_rule_set.h"
+#include "muz/base/dl_rule_transformer.h"
+#include "tactic/equiv_proof_converter.h"
+
+namespace datalog {
+    class mk_elim_term_ite : public rule_transformer::plugin {
+        context &m_ctx;
+        ast_manager &m;
+        rule_manager &rm;
+
+        expr_ref_vector m_ground;
+
+        bool elim(rule &r, rule_set &new_rules);
+        expr_ref ground(expr_ref &e);
+    public:
+        mk_elim_term_ite(context &ctx, unsigned priority);
+        ~mk_elim_term_ite() override;
+        rule_set * operator()(const rule_set &source) override;
+    };
+}
diff --git a/src/muz/transforms/dl_transforms.cpp b/src/muz/transforms/dl_transforms.cpp
index d4b9506e8..3ce2e6ee4 100644
--- a/src/muz/transforms/dl_transforms.cpp
+++ b/src/muz/transforms/dl_transforms.cpp
@@ -35,6 +35,7 @@ Revision History:
 #include "muz/transforms/dl_mk_scale.h"
 #include "muz/transforms/dl_mk_array_eq_rewrite.h"
 #include "muz/transforms/dl_mk_array_instantiation.h"
+#include "muz/transforms/dl_mk_elim_term_ite.h"
 #include "muz/base/fp_params.hpp"
 
 namespace datalog {
@@ -95,6 +96,8 @@ namespace datalog {
         if (ctx.get_params().xform_magic()) {
             transf.register_plugin(alloc(datalog::mk_magic_symbolic, ctx, 36020));
         }
+
+        transf.register_plugin(alloc(datalog::mk_elim_term_ite, ctx, 35010));
         ctx.transform_rules(transf);
     }
 }