Los Angeles, June 8: After more than a week of haggling over costs, Paramount Pictures yesterday reached an agreement with star Tom Cruise and his producing partner allowing Mission: Impossible 3 to move forward as planned.

Paramount confirmed that the sequel will start shooting July 18 in Italy, ending a week of brinksmanship in which new studio chairman Brad Grey balked at a proposed budget Paramount insiders said had soared to about $185 million.

Grey’s decision to forge ahead came after Cruise agreed to adjust his lucrative profit participation deal and shave the budget. As star and producer, Cruise typically takes no upfront fee but is said to be guaranteed 22.5 per cent of the studio’s gross receipts, starting with the first dollar earned at the box office.

Such give-and-take over the budgets of expensive films is common. Indeed, Cruise agreed to tweak his deal for 2000’s Mission: Impossible 2.

This negotiation, however, was closely watched in Hollywood given Grey’s three-month tenure at Paramount, the power and stature Cruise enjoys as Hollywood’s top draw and the lucrative film franchise at stake.

When Cruise and his producer partner Paula Wagner turned in their proposed budget last week, Grey made it clear to them he was uncomfortable with the economics of the deal. Adding to the film’s costs were more than $30 million in pre-production shutdown costs that Paramount incurred last year when the movie was postponed.