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                                                                   EXHIBIT 10.11

                              EMPLOYMENT AGREEMENT

                  THIS AGREEMENT ("Agreement") is made and entered into this
23rd day of October, 1997, by and between Mark W. Ohlendorf, a resident of the
State of Kansas (the "Employee"), and Alternative Living Services, Inc., a
Delaware corporation (the "Company").

                              W I T N E S S E T H:

                  WHEREAS, the Company, Tango Merger Corporation, a Kansas
corporation and a wholly owned subsidiary of the Company ("Merger Sub"), and
Sterling House Corporation, a Kansas corporation ("Sterling"), have entered into
that certain Agreement and Plan of Merger, dated as of July 30, 1997, as amended
as of September 2, 1997 (the "Merger Agreement"), whereby Merger Sub will be
merged with and into Sterling, with Sterling as the surviving corporation, and
Sterling shall become a wholly owned subsidiary of the Company (the "Merger");

                  WHEREAS, the Employee has been an employee and officer
of Sterling;

                  WHEREAS, after the Merger, Sterling, as a wholly owned
subsidiary of the Company, will continue to carry on the business previously
carried on by Sterling;

                  WHEREAS, the Company desires to employ Employee as an
executive officer of the Company effective at the Effective Time (as defined in
the Merger Agreement);

                  WHEREAS, the Company, on the one hand, and Employee, on the
other hand, desires to enter into this Agreement, pursuant to which Employee
will be employed by the Company on the terms and conditions hereinafter set
forth, and to make certain other agreements;

                  NOW THEREFORE, in consideration of the premises and of the
promises and agreements hereinafter set forth, the parties hereto, intending to
be legally bound, hereby agree as follows:

SECTION l. Employment; Effective Date; Waiver of Severance Payments.

                  Subject to the terms and conditions hereof, the Company hereby
employs the Employee, and the Employee hereby accepts such employment,
commencing as of the Closing Date (as defined in the Merger Agreement). Except
as set forth in Section 4.10 hereof, as a condition to the Company entering into
this Agreement, the Employee shall waive, and Employee hereby waives, any rights
which Employee may have to severance or termination payments, including, but not
limited to, rights to salary, bonuses or


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benefits, payable upon the termination of any employment agreement or
arrangement which Employee may have in effect with Sterling prior to the Closing
Date (the "Sterling Employment Agreement").

SECTION 2.  Position.

                  2.1. Title. The Employee shall serve as an executive officer
of the Company with the title of Senior Vice President and, as such, shall
report directly to the Chief Financial Officer of the Company; provided,
however, that at no time shall the Employee be requested to perform duties which
are not commensurate with his status as an executive officer of the Company.
Employee also consents to serve, without additional compensation, if elected, as
a director of the Company.

                  2.2 Location. Employee's location of employment shall be at
Sterling's principal executive offices in Wichita, Kansas; provided, however,
that Employee agrees to relocate his residence to Wisconsin on or after June 1,
1998 and that thereafter the location of his employment shall be at the
Company's principal executive offices in Brookfield, Wisconsin; provided,
further, that the Company may not transfer Employee to any other location
without Employee's prior written consent unless the transfer results from the
relocation of the Company's principal executive offices and the actual
relocation thereto of other executive officers of the Company holding positions
and responsibilities comparable to those of Employee.

                  2.3. Responsibilities. The Employee shall have such
responsibilities as are directed by the President of the Company from time to
time. The Employee agrees to devote his time during normal business hours to the
business and affairs of the Company (except as otherwise provided herein), to
use his best efforts to promote the interests of the Company and to perform
faithfully and efficiently the responsibilities assigned to him in accordance
with the terms of this Agreement, to the extent necessary to discharge such
responsibilities. This shall not preclude the Employee from (i) performing
services on civic or charitable boards or committees not significantly
interfering with the performance of his responsibilities under this Agreement,
and (ii) taking periods of vacation and sick leave to which the Employee is
entitled.

SECTION 3.  Term.

                  3.1. Term. The initial term of employment of the Employee (the
"Initial Term") hereunder shall commence on the Closing Date and shall continue
until the earlier (a) the first anniversary date of the Closing Date or (b) the
occurrence of any of the following events:


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                           (i) the death or disability of the Employee
                  (disability meaning a physical illness or incapacity that
                  prevents the Employee from performing all of the substantial
                  and material duties of Employee's then current position of
                  employment with the Company; provided, however, that a
                  disability shall be considered to exist only if the Employee
                  is prevented for a period of three (3) consecutive months
                  following the date such condition commenced and at the end of
                  such three (3) month period Employee remained so prevented, or
                  if, prior to the expiration of such three (3) month period,
                  the Employee's attending physician provides the Company with a
                  written prognosis that the illness, injury or other incapacity
                  that results in the Employee's current disabled condition may
                  be reasonably expected to prevent the Employee from performing
                  all of the substantial and material duties of Employee's then
                  current position of employment with the Company for a period
                  of at least six (6) consecutive months;

                           (ii) the mutual written agreement of the parties
                  hereto to terminate the Employee's employment hereunder;

                           (iii) the Company's termination of the Employee's
                  employment hereunder for "cause." For purposes of this
                  Agreement, "cause" for termination of the Employee's
                  employment shall exist only (x) if the Employee is convicted
                  of, or pleads guilty to, any act of fraud, misappropriation or
                  embezzlement, or any felony; (y) if the Employee has engaged
                  in conduct or activities materially damaging to the Company,
                  monetarily or otherwise (it being understood, however, that
                  neither conduct nor activities pursuant to the Employee's
                  exercise of Employee's good faith business judgment nor
                  unintentional physical damage to any property of the Company
                  by the Employee shall be a ground for such a determination by
                  the Company); or (z) if the Employee has willfully and
                  continuously failed to substantially perform Employee's duties
                  hereunder (other than any such failure resulting from
                  incapacity due to physical or mental illness), after a written
                  demand for substantial performance is delivered to the
                  Employee that specifically identifies the manner in which the
                  Company believes that the Employee has not substantially
                  performed those duties, and the Employee has failed to resume
                  substantial performance of such duties on a continuous basis
                  within fourteen (14) days after receiving such demand.
                  Termination for cause shall be made only upon vote of not less
                  than a majority of the directors then in office, after
                  reasonable notice to the Employee and an opportunity

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                  for the Employee, together with counsel, to be heard
                  before a duly called meeting of the Board; or

                           (iv) the Employee's termination of employment with
                  the Company for "good reason" upon reasonable notice to the
                  Company. For purposes of this Agreement "good reason" shall
                  exist if (x) the Company materially fails to comply with any
                  of the provisions of this Agreement, other than isolated,
                  insubstantial or inadvertent failures not occurring in bad
                  faith and which are remedied by the Company promptly after
                  receipt of notice thereof given by the Employee, or (y) the
                  Company changes the duties of the Employee hereunder in any
                  manner which constitutes a diminution of the duties to be
                  performed by the Employee under this Agreement.

The Initial Term hereof, and any renewal term, shall be automatically renewed
for an additional one (l) year period unless either the Employee or the Company
gives notice to the other party that it does not wish to renew this Agreement at
least ninety (90) days preceding the expiration of the Initial Term or any
renewal term, as the case may be.

                  3.2. Payments Upon Termination. If Employee's employment is
terminated by the Company for "cause" or by the Employee for any reason other
than "good reason," the Company shall pay Employee the Base Salary (as defined
below) through the effective date of termination at the rate in effect when
notice of termination is given, and the Company shall have no further
obligations to the Employee under this Agreement, subject to the rights and
benefits the Employee may have under employee benefits plans and programs of the
Company in existence as of the effective date of such termination, if any, which
shall be determined in accordance therewith. If the Employee's employment is
terminated by the Company for any reason other than for "cause" or by Employee
for "good reason," the Company shall continue to pay Employee the Base Salary at
the rate in effect at the time a notice of termination is given, together with
any applicable bonuses and rights and benefits the Employee may have under
employee benefits plans and programs of the Company in existence as of the date
of such termination, all for the twelve (12) month period following such
termination (the "Extended Period"); provided, however, such payments of Base
Salary and provision of bonuses, rights and benefits hereunder during the
Extended Period shall not be due and payable by the Company to Employee if
Employee (i) shall violate the provisions of Section 5 hereof or (ii) during the
Extended Period shall engage in or render any services to or be employed by any
Competing Business (as defined below) in the Area (as defined below) in the
capacity of officer, managerial or executive employee, director, consultant or
shareholder (other than as the owner of less than one percent (1%) of the shares
of a publicly-owned corporation

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whose shares are traded on a national securities exchange or in the NASDAQ
National Market System).

SECTION 4.  Compensation.

                  4.1. Base Salary. For the Initial Term of employment
hereunder, Employee shall be paid a salary (the "Base Salary") at the annual
rate of One Hundred Ninety Thousand Dollars ($190,000), payable in equal
installments in accordance with the payroll payment practices from time to time
adopted by the Company, subject to required payroll withholding provisions.
Employee's Base Salary shall be reviewed annually by the Board of Directors of
the Company, a committee thereof or the President, but shall in no event be
reduced to less than Employee's initial Base Salary as provided above without
the consent of Employee.

                  4.2. Not Used.

                  4.3. Incentive Bonuses. As additional compensation hereunder,
the Company may, in the sole discretion of the Board of Directors, pay Employee
an annual bonus (the "Annual Bonus") for each fiscal year during the term of the
Employee's employment hereunder. Subject to Section 3.2 of this Agreement, if
the Employee's employment hereunder is terminated pursuant to the terms of this
Agreement prior to the end of a calendar year, the Employee's Annual Bonus with
respect to that year shall be prorated for such portion of that year as Employee
was employed by the Company.

                  4.4. Stock Options. The Board of Directors of the Company
shall grant to Employee, as of the Closing Date, options to purchase the number
of shares of common stock of the Company (the "Common Stock") equal to the
quotient of $285,000 divided by the closing sales price of the Common Stock as
reported by the American Stock Exchange on the Closing Date (the "Closing Date
Price") pursuant to the terms of the Company's Amended and Restated 1995
Incentive Compensation Plan, which options shall have an exercise price per
share equal to the Closing Date Price and which options shall vest and first
become exercisable at the rate of 25% per year on the first, second, third and
fourth anniversary of the date of grant. Such options shall no longer be
exercisable as of and following the tenth (10th) anniversary of the date of
grant of such options.

                  4.5.     Insurance.

         (a) Life and Other Insurance. The Company shall provide to the Employee
such term life and group travel, accident, accidental death and dismemberment
insurance and long and short term disability insurance, or their equivalents, as
is provided from time to time for other executive officers of the Company of
comparable stature and title. The Company shall be entitled, at its sole option
and expense, to arrange for and keep in effect,

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during the term of the Employee's employment hereunder, so long as Employee is
insurable, key man insurance on the Employee in an amount determined by the
Board of Directors, such policy or policies to name the Company or its designee
as the beneficiary under such policy or policies. The Employee shall reasonably
cooperate with the Company in procuring such key man insurance as the Company
shall elect to purchase.

         (b) Medical Insurance. During the term of the Employee's employment
hereunder, the Company shall, at its expense, provide or arrange for and keep in
effect, hospitalization, major medical and similar medical and health insurance
for the Employee and his family, as is provided from time to time for executive
officers of the Company of comparable stature and title.

                  4.6. Vacation. The Employee shall be entitled to paid vacation
during each year of employment hereunder in accordance with the Company's
vacation policy for executive employees. For purposes of determining the number
of vacation days to which the Employee is entitled pursuant to the Company's
vacation policy, the Employee shall be entitled to credit for his time as an
employee of Sterling.

                  4.7. Retirement Benefits. During the term of employment
hereunder, the Employee shall have the same rights as comparable executive
officers of the Company to participate in all profit-sharing, pension and other
retirement plans as are now, or as may hereafter be, established by the Company
for such executives.

                  4.8. Out-of-Pocket Expenses. The Company shall reimburse the
Employee for all reasonable out-of-pocket expenses incurred by the Employee in
connection with the performance of his duties hereunder upon presentation to the
Company of appropriate vouchers therefor.

                  4.9. Automobile. During the term of Employee's employment
hereunder, the Company shall pay to the Employee an automobile allowance of
$600.00 per month, plus mileage in accordance with the Company's mileage
reimbursement policy, as in effect from time to time.

                  4.10 Moving and Relocation Expenses. In addition to the salary
and benefits set forth in this Section 4, the Company shall provide to Employee
the following benefits in connection with his moving and relocating to
Wisconsin:

                  (i) the Company agrees that, to the extent that the Employee
         has not received benefits to which he is entitled pursuant to Section
         10 of the Sterling Employment Agreement as of the commencement of
         Employee's employment hereunder, the Employee shall be entitled to
         receive such benefits from the Company.

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             (ii) until such time as Employee shall have completely relocated to
         Wisconsin, the Company shall (A) provide Employee a two (2) bedroom
         furnished apartment (at a monthly rental rate not to exceed $1500.00),
         and (B) reimburse Employee for all reasonable costs and expenses in
         commuting from Wichita, Kansas to Brookfield, Wisconsin.

            (iii) the Company shall pay on behalf of Employee or reimburse
         Employee, at Employee's option, for the actual costs paid to third
         parties relating to Employee's relocation to Wisconsin, including, but
         not limited to, (a) reasonable moving company expenses and insurance,
         (b) reasonable travel expenses for Employee and his spouse from Kansas
         to Wisconsin in order to enable Employee and his spouse to locate a
         suitable residence in Wisconsin, and (c) reasonable selling costs
         incurred in selling Employee's principal residence in Kansas.

SECTION 5.  Restrictive Covenants.

         (a) Employee acknowledges that the covenants herein are necessary to
protect the goodwill and other value of the Company and in view of the unique
and essential nature of the services Employee is to perform hereunder, the
irreparable injury that would befall the Company should Employee breach such
covenants.

         (b) The Employee further acknowledges that Employee's services to be
provided hereunder are of a special, unique and extraordinary character and that
Employee's position with the Company will place Employee in a position of
confidence and trust with the customers and other employees of the Company and
allow Employee access to Confidential Information (as defined below).

         (c) The Employee further acknowledges that the type and periods of
restrictions imposed by the covenants in this Section 5 are fair and reasonable
and that such restrictions will not prevent the Employee from earning a
livelihood.

         (d) The Employee further acknowledges that (i) the Company is engaged
in the business of developing, owning, acquiring and operating assisted living
facilities and specialty care facilities for the treatment of individuals
suffering from Alzheimer's disease; (ii) the Company conducts its business
activity in and throughout the Area (as defined below); and (iii) Competing
Businesses (as defined below) are engaged in businesses like and similar to the
business of the Company.

         (e) Having acknowledged the foregoing, the Employee covenants and
agrees with the Company that Employee will not, directly or indirectly:

                           (i)      while in the Company's employ and after the
                  termination of his employment for any reason whatsoever

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                  (whether voluntarily or involuntarily), disclose, use or
                  otherwise exploit, except as may be necessary in the
                  performance of his duties hereunder, any Confidential
                  Information disclosed to the Employee or of which the Employee
                  became aware by reason of his employment with the Company;

                           (ii) while in the Company's employ and through the
                  period ending eighteen (18) months after the termination of
                  his employment for any reason whatsoever (whether voluntarily
                  or involuntarily), employ or attempt to employ or assist
                  anyone else in employing in any Competing Business in the Area
                  any managerial or executive employee of the Company (whether
                  or not such employment is full time or is pursuant to a
                  written contract with the Company); and

                           (iii) while in the Company's employ and through the
                  period ending twelve (12) months after the termination of his
                  employment (whether voluntarily or involuntarily) for any
                  reason whatsoever, except for (x) termination by the Company
                  without cause or (y) termination by the Employee for "good
                  reason" or (z) expiration of the Initial Term without renewal
                  pursuant to Section 3.1 hereof by virtue of notice of
                  nonrenewal given by the Company to the Employee pursuant to
                  Section 3.1 hereof, engage in or render any services to or be
                  employed by any Competing Business in the Area in the capacity
                  of officer, managerial or executive employee, director,
                  management or strategic consultant or shareholder (other than
                  as the owner of less than one (l%) percent of the shares of a
                  publicly-owned corporation whose shares are traded on a
                  national securities exchange or on the NASDAQ National Market
                  System).

         (f) The Employee agrees that upon the termination of Employee's
employment for any reason whatsoever (whether voluntarily or involuntarily),
Employee will not take with Employee or retain without written authorization,
and Employee will promptly deliver to the Company, originals and all copies of
all papers, files or other documents containing any Confidential Information and
all other property belonging to the Company and in Employee's possession or
under Employee's control.

         (g) For purposes of this Section 5, the term (i) "Area" means a
twenty-five (25) mile radius of any congregate living community or assisted
living or specialty care facility owned, managed or operated by the Company at
the time the Employee's employment hereunder is terminated; (ii) "Competing
Business" means the business of developing, owning, acquiring or operating
assisted living facilities, specialty assisted care facilities for the treatment
of individuals suffering from Alzheimer's

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disease or congregate living communities; and (iii) "Confidential Information"
means any and all data, knowledge and information relating to the business of
the Company (whether or not constituting a trade secret) that is, has been or
will be obtained by or disclosed to the Employee or of which the Employee became
or becomes aware as a consequence of or through Employee's relationship with the
Company and that has value to the Company and is not generally known by its
competitors, provided, however, that no information will be deemed confidential
unless it is known to the Employee to be confidential information or has been
reduced to writing and marked clearly and conspicuously as confidential
information. Confidential Information shall not include any data or information
that has been voluntarily disclosed to the public by the Company (except where
such public disclosure has been made without authorization by the Company), or
that has been independently developed and disclosed by others, or that otherwise
enters the public domain through lawful means. Confidential Information
includes, but is not limited to, information relating to the Company's financial
affairs, processes, services, customers, executive officers or employees
compensation, research, development, purchasing, accounting or marketing.

         (h) The Employee acknowledges that irreparable loss and injury would
result to the Company upon the breach of any of the covenants contained in this
Section 5 and that damages arising out of such breach would be difficult to
ascertain. The Employee hereby agrees that, in addition to any other remedies
provided at law or in equity, the Company may petition and obtain from a court
of law or equity both temporary and permanent injunctive relief to prevent a
breach by the Employee of any covenant contained in this Section 5. The parties
hereto agree that all references to the Company in this Section 5 shall include,
unless the context otherwise requires, all subsidiaries and affiliates of the
Company.

SECTION 6. Miscellaneous.

                  6.1. Binding Effect. This Agreement shall inure to the benefit
of and shall be binding upon the Employee, Employee's executor, administrator,
heirs, personal representatives, successors and assigns, and upon the Company
and its successors and assigns; provided, however, that the obligations and
duties of the Employee may not be assigned or delegated.

                  6.2. Governing Law. This Agreement shall be deemed to be made
in, and all respects shall be interpreted, construed, enforced and governed by
and in accordance with, the laws of the State of Wisconsin, without giving
effect to any principles of conflicts of laws.

                  6.3. Invalid Provisions.  The parties hereto agree that
the agreements, provisions and covenants contained in this

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Agreement (including, without limitation, the agreements, provisions and
covenants contained in Section 5 hereof) are severable and divisible, that none
of such agreements, provisions or covenants depends upon any other provision,
agreement or covenant or its enforceability, and that each such agreement,
provision and covenant constitutes an enforceable obligation between the Company
and the Employee. Consequently, the parties hereto agree that neither the
invalidity nor the unenforceability of any agreement, provision or covenant of
this Agreement shall affect the other agreements, provisions or covenants
hereof, and this Agreement shall remain in full force and effect and be
construed in all respects as if such invalid or unenforceable agreement,
provision or covenant were omitted.

                  6.4. Headings. The section and paragraph headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.

                  6.5. Notices. All communications provided for hereunder shall
be in writing and shall be deemed to be given when delivered in person or
deposited in the United States mail, first class, registered mail, return
receipt requested, with proper postage prepaid, and

         (a)      If to the Employee, addressed to:

                                    Mark W. Ohlendorf
                                    Sterling House Corporation
                                    453 S. Webb Road
                                    Suite 500
                                    Wichita, Kansas 67207
                                    Facsimile:        (316) 684-8948

         (b)      If to the Company, addressed to:

                                    Alternative Living Services, Inc.
                                    450 N. Sunnyslope Road
                                    Suite 300
                                    Brookfield, Wisconsin 53005
                                    Attention:     President
                                    Facsimile:     (414) 789-6677

                  with a copy to:

                                    Rogers & Hardin LLP
                                    2700 International Tower
                                    Peachtree Center
                                    229 Peachtree Street, N.E.
                                    Atlanta, Georgia 30303
                                    Attention:      Alan C. Leet, Esq.
                                    Facsimile:      (404) 525-2224


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or at such other place or places or to such other person or persons as shall be
designated in writing by the parties hereto in the manner provided above for
notices.

                  6.6. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.

                  6.7. Waiver of Breach. The waiver by the Company or by the
Employee of a breach of any provision, agreement or covenant of this Agreement
by the Employee or by the Company, respectively, shall not operate or be
construed as a waiver of any prior or subsequent breach of the same or any other
provision agreement or covenant.

                  6.8. Entire Agreement. This Agreement is intended by the
parties hereto to be the final expression of their agreement and is the complete
and exclusive statement thereof notwithstanding any representation or statements
to the contrary heretofore made. This Agreement replaces in its respective
entirety any and all prior agreements, arrangements, understandings or
commitments between the Company and/or any of its predecessors and affiliates
and the Employee relating to the Employee's employment or other services
rendered to or for the benefit of the Company and/or any of its predecessors and
affiliates. This Agreement may be modified only by written instrument signed by
each of the parties hereto.


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                  IN WITNESS WHEREOF, the Employee has duly executed, and the
Company has caused this Agreement to be duly executed by its duly authorized
officers, and the parties have caused this Agreement to be delivered, all as of
the day and year first written above.


                                    COMPANY:


                                    ALTERNATIVE LIVING SERVICES, INC.



                                    By:  _________________________________
                                    Its: _________________________________



                                    EMPLOYEE:


                                    ______________________________________
                                    Mark W. Ohlendorf







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