Computer game maker MicroProse Inc. will receive $10 million from Spectrum HoloByte Inc., another computer game designer, as part of a planned merger that the two companies announced yesterday.

MicroProse, a Hunt Valley, Md., firm whose games include the popular F-15 Strike Eagle flight simulator, lost money last year and has been facing a cash crunch.

It holds about 13 percent of the market for personal computer games, excluding cartridge games for systems such as Nintendo and Sega, said William Loomis, an analyst with Ferris, Baker Watts Inc. in Baltimore. Spectrum, a privately held Alameda, Calif., company whose software includes the popular falling-brick game Tetris, accounts for about 4 percent.

Together, said Loomis, "they are not going to dominate the industry, but they will be a bigger player." Loomis said he feels this merger is part of a wave of consolidation in the $350 million entertainment software industry.

Spectrum yesterday invested $1 million in MicroProse and will put the other $9 million in on Monday, the companies said. The companies hope to complete the merger by June 30. If the merger is completed, Spectrum will own about 60 percent of the merged company and current MicroProse stockholders will own the rest. The resulting stock will be publicly traded under the MicroProse name, according to Gerald Blair, vice president for marketing at MicroProse. The company's stock rose $1 yesterday to $6 in heavy Nasdaq trading.

The merger is still subject to a number of conditions. If it is not completed, MicroProse would owe Spectrum the $10 million.

The merger depends on MicroProse resolving issues with its lenders and creditors, according to the companies. MicroProse owes an undisclosed amount -- analyst Loomis estimated between $3 million and $5 million -- to Signet Bank. The bank has extended the company credit for daily operations to allow merger talks to continue, said Blair, the MicroProse vice president.

Blair said MicroProse needed the $10 million in cash quickly. "It was no secret that we were cash-constricted," he said. The company lost $5.3 million in the year ended March 31 on sales of $46.5 million.

Blair cited a number of reasons for the loss, including changes in accounting procedures, late delivery of products, expensive product development and the costs of dealing with flawed products, Blair said. The fantasy game Darklands, for example, took two years to develop and, once released, turned out to have "bugs" -- flaws in the software -- Blair said.

"MicroProse clearly has had financial difficulties," said Patrick S. Feely, chief executive of Spectrum. "We believe that the company has a very solid plan for turning itself around, and we believe in their plan and their ability to do that."

One major shareholder said, though, that the companies need to say more about what the merged company will look like. "We need more details," said Harris Leviton, portfolio manager for Fidelity Retirement Growth Fund, which owns 10 percent of MicroProse's stock. "Spectrum HoloByte is not a public company. We know some stuff about them, but we really don't know enough to know how the stock is going to look afterwards."

Even before the merger is completed, MicroProse's co-founder, former fighter pilot J.W. "Wild Bill" Stealey, will step down as president and CEO, according to Feely. "There was a feeling among the board {of MicroProse} that new leadership was needed," Feely said.

Spectrum HoloByte will appoint four new members to MicroProse's board of directors as part of the agreement, and the new board will run MicroProse until the merger actually takes place, Feely said. Until the two companies merge, they will continue to operate as separate entities.