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                                                                    EXHIBIT 10.5

July 11, 2000


Eric I. Blachno
272 -1c Iven Ave,
St Davids, PA 19087
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Dear Eric:

        It is with great pleasure that we extend an offer to you for employment
with Luminent, Inc. (the "Company), on the following terms. The Company is
currently a wholly owned subsidiary of MRV Communications, Inc. ("MRV"). It is
MRV's current plan to undertake an initial public offering of the common stock
of the Company within six months of the date hereof and the filing of the
registration statement in connection therewith is imminent.

        Position. Your position will be that of Vice President of Finance and
Chief Financial Officer of the Company. You shall report to the President and
CEO of the Company.

        You agree that you will perform your duties faithfully and to the best
of your ability and will devote your full business efforts and time to the
Company. During your employment with the Company, you agree not to actively
engage in any other employment, occupation or consulting activity for any direct
or indirect remuneration without the prior approval of the Company's Board.

        Salary, Bonus, Benefits. Upon joining the Company you will receive a
base salary of $150,000 per annum, subject to appropriate taxes and
withholdings, and payable in accordance with the Company's standard payroll
practices. For the year 2000, you will receive an annual bonus "at target" of
$37,500. In addition, for each year after 2000, you will receive an annual bonus
"at target" of $75,000 based on your achievement of performance criteria
determined by the Company's Board with your input during the first quarter of
such year after consultation with you.

        You will also be entitled to the other Company paid benefits regularly
available from time to time to all Luminent employees, and subject to the terms
and conditions of the Company's policies and procedures, such as health, dental
and vision insurance for you and your family, as well as vacation and other
leave. The terms of your annual vacation shall be no less favorable than those
of the President of the Company. The Company will reimburse you for reasonable
travel, entertainment or other expenses incurred by you in the furtherance of or
in connection with the performance of your duties hereunder, in accordance with
the Company's expense reimbursement policy as in effect from time to time. After
six months of continued employment, you will also be eligible to enroll in the
Company's 401(k) plan.


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        MRV Stock Options. In order to induce you to become a employee and Vice
President and Chief Financial Officer of the Company, upon your signing this
offer you will receive stock options to purchase the common stock of MRV (the
"MRV Options"). These options will be fully exercisable on or after the date of
grant and the exercise price per share of these options will be equal to 50% of
the closing bid price of MRV's common stock as reported by Nasdaq on the date of
grant. The number of shares purchasable by such option will be 22,000.

        These options will be exercisable for five years from the date of grant
and will not be transferable in any manner, either voluntarily or involuntarily
by operation of law, except by will or the laws of descent or distribution.

        Company Stock Options. Upon joining the Company, you will also be
granted options to purchase shares of the Company's common stock ("Company
Options") in an amount equal to half of one percent (0.5%) of number of common
shares outstanding on a fully-diluted basis immediately prior to the Company's
initial public offering of its common stock (the "IPO"). Thus, for example,
assuming our targeted total number of 160,000,000 shares to be outstanding prior
to the IPO on a fully-diluted basis, your Company Options would equal the right
to purchase 800,000 shares of the Company. All your Company Stock Options will
have an exercise price per share equal to the lower of (i) 60% of the IPO price
per share (as defined below), or (ii) an amount calculated by dividing One
Billion Dollars by the number of Luminent shares outstanding on a fully diluted
basis prior to the IPO, will vest (become exercisable) at the rate of 25% per
year commencing with your hire date, will have a term of 10 years (unless sooner
terminated as a result of the termination of your employment) and will not be
transferable in any manner, either voluntarily or involuntarily by operation of
law, except by will or the laws of descent or distribution. . For purposes of
this paragraph, the "IPO price per share" shall mean the low end of the offering
price range reflected in the first filing of the IPO registration statement (or
an amendment thereto) in which an offering price range is reflected.

        Option Agreements. The terms of the MRV Options and the Company Options
(collectively the "Options") shall be set forth in separate stock option
agreements which you will be required to sign.

        Co-Sale Rights. In the event the Company conducts a firm commitment
follow-on public offering during the term of your employment (i.e., a public
offering of its shares after the IPO), you will be entitled to include, on a
basis no less favorable to you than is made available to any other employee of
the Company, in the related registration statement filed by the Company under
the Securities Act of 1933 (the "Securities Act") a portion of the shares of the
Company you have obtained upon exercise of your vested options as negotiated
with the managing underwriter.

        MRV S-8. MRV shall use its best efforts to file with the Securities and
Exchange Commission ("SEC") a registration statement on Form S-8 under the
Securities Act with respect to the shares underlying all then-unexercised MRV
Options as soon as practicable after the date of this Agreement.

        Luminent S-8. Luminent shall use its best efforts to file with the SEC a
registration statement on Form S-8 under the Securities Act with respect to the
shares underlying all then-


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unexercised Company Options as soon as practicable on or after the effectiveness
date of its registration statement filed in connection with its IPO.

        Term and Severance. Your employment with the Company pursuant to this
Agreement shall commence on the date set forth on the signature page hereto (the
"Effective Date") and shall continue for four (4) years thereafter (the "Initial
Employment Term") subject to the terms and conditions herein set forth. During
the Initial Employment Term, the Company shall be entitled to terminate your
employment hereunder at any time, either for Cause (as defined below) or without
Cause.

        In the event you do voluntarily terminate your employment under this
agreement, the unexercised MRV Options shall terminate and you agree:

        (a) to return to MRV the number of shares of common stock theretofore
obtained upon exercise of the MRV Options against payment by MRV of an amount
equal to the sum of (i) your purchase price therefor and (ii) the non-refundable
taxes (as defined below) paid or payable by you by reason of your exercise of
the MRV Options, as is determined by application of the following formula:

        X=  ((36-N)/36) x A, where X is equal to the number of shares to be
            returned, N is equal to the number of full months between the
            Effective Date and the date of your voluntary termination, and A is
            equal to the number of shares originally subject of the MRV Option
            that you have not sold, and

        (b) if you no longer own all of such shares, to pay to MRV from the
profit you received upon the sale or deemed sale (as defined below) of all or
such portion of the such shares, the amount determined by the following formula:

        X=  P x ((36-N)/36)), where X is equal to the dollar amount to be paid
            to MRV, P is equal to the profit you obtained upon the sale or
            deemed sale of such shares, and N is equal to the number of full
            months between the Effective Date and the date of your voluntary
            termination.

        For purposes of an actual sale pursuant to clause (b) above, "profit"
shall mean the difference between (i) the proceeds (net of brokerage
commissions) from your sale of the shares underlying the exercised MRV Options
and (ii) the sum of nonrefundable taxes, expenses of $50,000 and the exercise
price you paid to exercise such MRV Options.

        For purposes of clause (b) above, a "deemed sale" shall mean any
disposition that you made of MRV stock other than through a sale upon the open
market. For purposes of such a deemed sale, "profit" shall mean the difference
between (i) the closing bid price per share of MRV's common stock on the date of
the disposition and (ii) the exercise price you paid to exercise such MRV
options, multiplied by the number of shares of MRV stock that are the subject of
such deemed sale.

        For purposes of clauses (a) and (b) above, "non-refundable taxes" shall
mean all Federal and state income and other taxes, including related interest
and penalties, paid by you, or determined by you to be payable, on account of
your exercise of the MRV Option or, if applicable,


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your sale of shares underlying the MRV Option (all such amounts collectively,
"Taxes"). You shall provide MRV with any information it may reasonably request
regarding the amount of such Taxes paid or payable by you. You shall promptly
pay to MRV any refund of Taxes received by you, together with any interest paid
by the Internal Revenue Service or other applicable taxing authority thereon. If
MRV shall reasonably request in writing that you file a claim for a refund of
Taxes paid by you, you shall file such refund claim as soon as reasonably
practicable after your receipt of such request and shall take all reasonable
action to cooperate with MRV in the prosecution of such refund claim; provided
that MRV shall pay all legal, accounting and other expenses incurred by you in
connection with such refund claim.

        Your employment with the Company (after the Initial Employment Term)
will be "at will", meaning that either you or the Company will be entitled to
terminate your employment at any time and for any reason, with or without Cause.

        Upon any termination of your employment, with or without Cause, all
Options that have vested through the date of termination (including those whose
vesting has accelerated as provided below) will remain exercisable for a period
of two years after the date of termination. In the event your employment is
terminated by reason of your death or disability or by the Company other than
for Cause (as defined below), (1) you shall be entitled to receive as severance
("Severance") an amount equal your current annual salary plus bonus (payable
over a 12-month period following your date of termination on the same schedule
as your salary would have been payable had you remained an employee of the
Company) and (2) all of your unvested Options will automatically vest and become
exercisable. For purpose of determining the amount of your cash severance, your
bonus shall be considered your target annual bonus amount for the year of
termination (or if such target amount has not been determined as of the date of
termination, for the preceding year), but shall exclude the compensation paid by
MRV or Luminent in the form of stock options.

        In the event your employment is terminated for Cause, you shall be
entitled to such of your base salary and vacation pay accrued, and reasonable
business related expenses incurred, through the date of termination.

        "Cause" means (a) willful and repeated failure to comply with the lawful
instructions of the individual/s to whom you report, (b) gross negligence or
willful misconduct in the performance of your duties to the Company, (c)
commission of any act of fraud against, or the misappropriation of material
property belonging to, the Company, or (d) conviction of a crime that is
materially injurious to the business or reputation of the Company.

        One hundred percent (100%) of your unvested Options will vest and become
exercisable immediately prior to a Sale of the Company.

        "Sale of the Company" means the consummation of a transaction (i) that
by its terms offers to all or substantially of the stockholders of the Company
an opportunity to receive cash or securities (whether debt, equity or other and
whether issued by the Company (e.g., in a recapitalization) or a third-party) in
exchange for all or a portion of their shares of common stock of the Company,
however a sale of the Company shall not be considered to have occurred as a
result of the pro rata distribution by MRV to its stockholders of capital stock
of the Company. (ii) in


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which the stockholders of the Company approve a plan of complete liquidation of
the Company; or (iii) that involves the consummation of the sale or disposition
by the Company of all or substantially all the Company's assets.

        You acknowledge that the nature of the Company's business is such that
if you were to become employed by, or substantially involved in, the business of
another opto-electronic components company during the twelve (12) months
following the termination of your employment with the Company, it would be very
difficult for you not to rely on or use the Company's trade secrets and
confidential information. Thus, to avoid the inevitable disclosure of the
Company's trade secrets and confidential information, you agree and acknowledge
that your right to receive the Severance (to the extent you are otherwise
entitled to such Severance) shall be conditioned upon your not directly or
indirectly engaging in competitive activities. Upon any breach of this section,
all severance payments pursuant to this Agreement shall immediately cease and
unexercised options, which have vested as a result of your termination, shall
thereupon terminate.

        Conditions. This offer is contingent upon your execution and return of a
standard Luminent, Inc Employee Proprietary Information and Inventions
Agreement.

        The sale of the securities that are the subject of this agreement has
not been qualified with the Commissioner of Corporations of the State of
California and the issuance of the securities or the payment or receipt of any
part of the consideration therefor prior to the qualification is unlawful,
unless the sale of securities is exempt from the qualification by Section 25100,
25102, or 25105 of the California Corporations Code. The rights of all parties
to this agreement are expressly conditioned upon the qualification being
obtained, unless the sale is so exempt.

        Laws Applicable to Construction; Choice of Jurisdiction and Forum. This
Agreement shall be construed and enforced in accordance with the laws of the
State of California, without reference to the conflict of laws provisions of any
jurisdiction. The parties hereby submit to the exclusive jurisdiction of and
venue in the state courts of the State of California or the federal courts
located within or the Central District of California with respect to any
disputes concerning the subject matter of this agreement.

                                     * * * *

        We look forward to working with you at MRV and the Company and
appreciate your enthusiastic contribution to reach our goals.


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        Please indicate acceptance of this offer by signing and returning a copy
of this letter within five calendar days. By signing this letter, you represent
and warrant to MRV and the Company that you are under no contractual commitments
inconsistent with your obligations to the Company. This offer, if not accepted,
will expire at 6:00pm on July 12, 2000.

                                            Sincerely,

                                            MRV COMMUNICATIONS, INC.


                                            By: /s/ Noam Lotan
                                               --------------------------------
                                            Title: Noam Lotan, President & CEO


                                            LUMINENT, INC.


                                            By: /s/ Noam Lotan
                                               --------------------------------
                                            Title: Chairman

Accepted:

/s/ Eric Blachno
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Eric Blachno
Dated:  July 12, 2000




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