diff --git a/.gitignore b/.gitignore
index 927b20cd726..57a2b37fbb5 100644
--- a/.gitignore
+++ b/.gitignore
@@ -11,7 +11,7 @@ patches-master
 out
 dist
 ideaSDK
-PluginVerifier
+dependencies
 .idea/dictionaries/yozh.xml
 .idea/workspace.xml
 tmp
diff --git a/TeamCityBuild.xml b/TeamCityBuild.xml
index a37cd929ec5..212ce07014f 100644
--- a/TeamCityBuild.xml
+++ b/TeamCityBuild.xml
@@ -14,7 +14,7 @@
     <property name="compiler.version.java.bk" value="${compiler.version.java}.bk"/>
     <property name="compiler.version.java.versioned" value="${compiler.version.java}.versioned" />
 
-    <property name="plugin.verifier" value="${basedir}/PluginVerifier/plugin-verifier-1.0-SNAPSHOT.jar"/>
+    <property name="plugin.verifier" value="${basedir}/dependencies/plugin-verifier.jar"/>
     <property name="plugin.zip" value="${artifact.output.path}/kotlin-plugin-${build.number}.zip" />
 
     <macrodef name="echoprop">
diff --git a/build.xml b/build.xml
index cdee4e237a9..1496e46461a 100644
--- a/build.xml
+++ b/build.xml
@@ -166,9 +166,12 @@
     </target>
 
     <target name="jarjar">
-        <taskdef name="jarjar" classname="com.tonicsystems.jarjar.JarJarTask" classpath="${basedir}/build/jarjar-1.2.jar"/>
+        <taskdef name="jarjar" classname="com.tonicsystems.jarjar.JarJarTask" classpath="${basedir}/dependencies/jarjar.jar"/>
+        <taskdef resource="proguard/ant/task.properties" classpath="${basedir}/dependencies/proguard.jar"/>
 
-        <jarjar jarfile="${output}/kotlin-compiler-tmp.jar">
+        <!-- JarJar Kotlin compiler & dependencies -->
+        <delete file="${output}/kotlin-compiler-jarjar.jar" failonerror="false"/>
+        <jarjar jarfile="${output}/kotlin-compiler-jarjar.jar">
             <fileset dir="${output}/classes/compiler"/>
             <fileset dir="${output}/classes/runtime"/>
             <fileset dir="${basedir}/compiler/frontend/src" includes="jet/**"/>
@@ -176,6 +179,19 @@
             <zipgroupfileset dir="${basedir}/lib" includes="*.jar"/>
             <zipgroupfileset dir="${basedir}/ideaSDK/core" includes="*.jar"/>
 
+            <zap pattern="com.thoughtworks.xstream.converters.extended.ISO8601*"/>
+            <zap pattern="com.thoughtworks.xstream.converters.reflection.CGLIBEnhancedConverter*"/>
+            <zap pattern="com.thoughtworks.xstream.io.xml.Dom4J*"/>
+            <zap pattern="com.thoughtworks.xstream.io.xml.Xom*"/>
+            <zap pattern="com.thoughtworks.xstream.mapper.CGLIBMapper*"/>
+
+            <zap pattern="org.apache.log4j.jmx.Agent"/>
+            <zap pattern="org.apache.log4j.net.JMS*"/>
+            <zap pattern="org.apache.log4j.net.SMTP*"/>
+            <zap pattern="org.apache.log4j.or.jms.MessageRenderer"/>
+
+            <zap pattern="org.jdom.xpath.Jaxen*"/>
+
             <rule pattern="com.intellij.**" result="kotlinc.internal.com.intellij.@1"/>
             <rule pattern="org.intellij.lang.annotations.**" result="kotlinc.internal.org.intellij.lang.annotations.@1"/>
             <rule pattern="org.jetbrains.annotations.**" result="kotlinc.internal.org.jetbrains.annotations.@1"/>
@@ -189,11 +205,13 @@
 
         <delete failonerror="false" dir="${output}/kotlin-compiler.exploded"/>
         <mkdir dir="${output}/kotlin-compiler.exploded"/>
+        <unzip src="${output}/kotlin-compiler-jarjar.jar" dest="${output}/kotlin-compiler.exploded"/>
 
-        <unzip src="${output}/kotlin-compiler-tmp.jar" dest="${output}/kotlin-compiler.exploded"/>
-        <delete file="${output}/kotlin-compiler-tmp.jar"/>
+        <delete file="${output}/kotlin-compiler-jarjar.jar"/>
 
-        <jar jarfile="${output}/kotlin-compiler-standalone.jar">
+        <!-- Clean JarJar result -->
+        <delete file="${output}/kotlin-compiler-clean.jar" failonerror="false"/>
+        <jar jarfile="${output}/kotlin-compiler-clean.jar">
             <fileset dir="${output}/kotlin-compiler.exploded">
                 <include name="**/*.class"/>
                 <include name="**/*.jet"/>
@@ -213,8 +231,57 @@
                 <attribute name="Main-Class" value="org.jetbrains.jet.cli.jvm.K2JVMCompiler"/>
             </manifest>
         </jar>
-
         <delete dir="${output}/kotlin-compiler.exploded" />
+
+        <available property="rtjar" value="${java.home}/lib/rt.jar" file="${java.home}/lib/rt.jar" />
+        <available property="rtjar" value="${java.home}/lib/classes.jar" file="${java.home}/lib/classes.jar" />
+
+        <delete file="${output}/kotlin-compiler.jar" failonerror="false"/>
+        <proguard><![CDATA[
+            -injars '${output}/kotlin-compiler-clean.jar'
+            -outjars '${output}/kotlin-compiler.jar'
+
+            -libraryjars '${rtjar}'
+
+            -target 1.6
+            -dontoptimize
+            -dontobfuscate
+
+            # Keep application classes, along with their 'main' methods.
+            -keepclasseswithmembers public class * {
+                public static void main(java.lang.String[]);
+            }
+
+            -keepclasseswithmembers class * {
+                # Various dynamically called methods
+
+                void start();
+                void stop();
+                void dispose();
+                ** getFileSystem();
+                ** isVarArgs();
+                ** getApplication();
+                ** executeOnPooledThread(java.lang.Runnable);
+                int getBooleanAttributes(java.io.File);
+                <init>(kotlinc.internal.com.intellij.lang.ASTNode);
+            }
+
+            # Keep the special static methods that are required in enumeration classes.
+            -keepclassmembers enum * {
+                public static **[] values();
+                public static ** valueOf(java.lang.String);
+            }
+
+            -keepclassmembers class * {
+                ** toString();
+                ** hashCode();
+                ** project();
+
+                ** TYPE;
+                ** ourInstance;
+            }
+        ]]></proguard>
+        <delete file="${output}/kotlin-compiler-clean.jar" />
     </target>
 
     <target name="clean">
diff --git a/build/jarjar-1.2.jar b/build/jarjar-1.2.jar
deleted file mode 100644
index e32d30cd2ac..00000000000
Binary files a/build/jarjar-1.2.jar and /dev/null differ
diff --git a/lib/jsr305-1.3.9.jar b/lib/jsr305-1.3.9.jar
new file mode 100644
index 00000000000..a9afc6619b4
Binary files /dev/null and b/lib/jsr305-1.3.9.jar differ
diff --git a/update_dependencies.xml b/update_dependencies.xml
index 6de46208e56..b41756d66b9 100644
--- a/update_dependencies.xml
+++ b/update_dependencies.xml
@@ -1,24 +1,44 @@
 <project name="Update Dependencies" default="update">
     <property name="build.zip" value="ideaIC-117.SNAPSHOT.win.zip"/>
 
-    <target name="update">
+    <target name="update" depends="fetch-third-party">
         <execute_update/>
     </target>
 
-    <target name="jb_update">
+    <target name="jb_update" depends="fetch-third-party">
         <execute_update teamcity="http://buildserver.labs.intellij.net" teamcity.build="bt2560"/>
     </target>
 
+    <target name="fetch-third-party">
+        <mkdir dir="dependencies" />
+        <mkdir dir="dependencies/download" />
+
+        <!-- ProGuard -->
+        <get src="http://heanet.dl.sourceforge.net/project/proguard/proguard%20beta/4.8beta/proguard4.8beta1.zip" dest="dependencies/download/" usetimestamp="true"/>
+
+        <delete file="dependencies/proguard.jar" failonerror="false"/>
+        <unzip src="dependencies/download/proguard4.8beta1.zip" dest="dependencies">
+            <patternset>
+                <include name="proguard4.8beta1/lib/proguard.jar"/>
+            </patternset>
+            <mapper type="flatten"/>
+        </unzip>
+
+        <!-- JarJar -->
+        <get src="http://jarjar.googlecode.com/files/jarjar-1.2.jar" dest="dependencies/download/" usetimestamp="true"/>
+        <copy file="dependencies/download/jarjar-1.2.jar" tofile="dependencies/jarjar.jar" overwrite="true" />
+
+        <!-- PluginVerifier -->
+        <get src="http://teamcity.jetbrains.com/guestAuth/repository/download/bt351/.lastPinned/plugin-verifier-1.0-SNAPSHOT.jar"
+             dest="dependencies/download/"/>
+        <copy file="dependencies/download/plugin-verifier-1.0-SNAPSHOT.jar" tofile="dependencies/plugin-verifier.jar" overwrite="true" />
+    </target>
+
     <macrodef name="execute_update">
         <attribute name="teamcity" default="http://teamcity.jetbrains.com"/>
-        <attribute name="teamcity.build" default="bt365"/> <!-- IDEA CE 11.1 branch 117 -->
+        <attribute name="teamcity.build" default="bt365"/>
+        <!-- IDEA CE 11.1 branch 117 -->
         <sequential>
-            <delete dir="PluginVerifier" failonerror="false" />
-            <delete file="PluginVerifier" failonerror="false" />
-            <mkdir dir="PluginVerifier" />
-
-            <get src="http://teamcity.jetbrains.com/guestAuth/repository/download/bt351/.lastPinned/plugin-verifier-1.0-SNAPSHOT.jar" dest="PluginVerifier"/>
-
             <property name="core" value="ideaSDK/core"/>
             <property name="tc" value="@{teamcity}/guestAuth/repository/download/@{teamcity.build}/.lastSuccessful"/>
 
@@ -40,8 +60,16 @@
             <unzip src="ideaSDK/${build.zip}" dest="ideaSDK"/>
             <delete file="ideaSDK/${build.zip}"/>
 
+            <copy file="ideaSDK/lib/jdom.jar" todir="${core}"/>
+            <copy file="ideaSDK/lib/jna.jar" todir="${core}"/>
+            <copy file="ideaSDK/lib/log4j.jar" todir="${core}"/>
+            <copy file="ideaSDK/lib/xstream.jar" todir="${core}"/>
+            <copy file="ideaSDK/lib/xpp3-1.1.4-min.jar" todir="${core}"/>
+            <!--<copy file="lib/jsr305-1.3.9.jar" todir="${core}"/>-->
+
             <!-- TODO temporary workaround since util-rt is not packaged into intellij-core.jar -->
             <copy file="ideaSDK/lib/util.jar" todir="${core}"/>
+
             <!--
                  This one needs to be deleted because otherwise it gets onto the classpath
                  together with junit-4.10.jar and the classloading goes crazy that breaks