Document:

<PAGE>   1
                                                                  EXHIBIT 10.126

                          GUARANTY AND SURETY AGREEMENT

                  THIS GUARANTY is made as of this 1st day of May, 1998, by
ALTERNATIVE LIVING SERVICES, INC., a Delaware corporation with an address at 450
North Sunnyslope Road, Brookfield, Wisconsin 53005 ("Guarantor") in favor of
SOVEREIGN BANK, with an address at Two Aldwyn Center, Lancaster Avenue and Route
320, Villanova, Pennsylvania 19085, ("Bank"), to secure obligations of ALS-CLARE
BRIDGE, INC., a Delaware corporation ("Borrower").

                  Bank has agreed to lend to Borrower $3,450,000 (the "Loan").
The Loan will be evidenced by Borrower's Note (the "Note") of even date herewith
and secured by, among other things, a Mortgage and Security Agreement of even
date herewith from Borrower to Bank (the "Mortgage") encumbering an assisted
living facility located near the intersection of Blue Course and Whitehall Road,
Furguson Township, Centre County, Pennsylvania (the "Property"). As a condition
to making the Loan, Bank has required the execution and delivery of this
Guaranty.

                  NOW, THEREFORE, in consideration of the undertakings of Bank
pursuant to the Mortgage and intending to be legally bound, Guarantor hereby
agrees as follows:

                  1.       Payment and Performance of the Obligations.

                           (a)      In order to secure payment of the Note by
Borrower and performance of Borrower's obligation thereunder and under the
Mortgage, Guarantor hereby irrevocably and unconditionally guarantees to Bank,
and becomes surety to Bank for, the due and punctual payment and performance of
all the obligations of Borrower to Bank, whether primary, secondary, direct,
contingent, sole, joint, several or joint and several, including without
limitation the payment of principal and any interest accruing thereon, now
existing or hereafter at any time or times incurred, under the Note or the
Mortgage or under any of the Loan Documents (which term is used herein as
defined in the Note) or under any renewals, extensions or modifications thereof
(hereinafter referred to individually as "Obligation" and collectively as
"Obligation"). During the Construction Period (which term is used herein as
defined in the Note), Bank shall have full, complete and unlimited recourse
against any and all assets of Guarantor for repayment of Obligations. Beginning
on the first day of the month immediately following the month in which the
Construction Period ends, notwithstanding anything to the contrary contained
herein, Bank shall have recourse against any and all assets of Guarantor only
for repayment of Obligations up to the amount by which the outstanding principal
amount of the Loan (together with all accrued but unpaid interest thereon, and
all unpaid fees, premiums and penalties with respect thereto) exceeds 50 % of
the value of the Property as determined by an appraisal acceptable to Bank (the
"Full Recourse Portion"). Bank shall have recourse only against Guarantor's
partnership interests in Borrower for repayment of the balance of the
Obligations (the "Limited Recourse Portion"). If any Obligation is not paid or
performed by Borrower punctually when due, subject to any applicable grace
period, including without limitation any Obligation due by acceleration of the
maturity thereof following the occurrence of an Event of Default (as defined in
the Mortgage), Guarantor will, upon Bank's demand, immediately pay or perform
such Obligation or cause the same to be paid or performed strictly in accordance
with the terms thereof. Bank may cause judgment to be entered against Guarantor
for the full amount

<PAGE>   2

of the Obligations, which judgment shall reflect the limitations on recourse set
forth above. Guarantor will pay to Bank, upon demand, and Bank shall have
recourse against any and all of Guarantor's assets for payment of, all costs and
expenses, including without limitation reasonable counsel fees, which may be
incurred by Bank in the collection or enforcement of the Obligations or of
Guarantor's obligations under this Guaranty (which costs and expenses shall
constitute part of the Full Recourse Portion).

                           (b)      Notwithstanding Paragraph 1(a), Bank may
seek and obtain a monetary judgment and have full recourse against any and all
assets of Guarantor for repayment of the Obligations if Borrower shall file a
petition in bankruptcy or a petition or answer seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under the bankruptcy laws of the United States or under any similar
federal, state or other statute relating to relief from indebtedness, or if Bank
incurs any loss, expense or damage by reason of (i) any fraud of Guarantor or of
Borrower in making any representation or warranty, or in the preparing or
delivery of any financial statement or other certificate or information
submitted to Bank; (ii) the misapplication of insurance proceeds or condemnation
awards; (iii) the misapplication of prepaid rent or rent collected after a
default; (iv) any environmental matters as more fully described in that certain
Environmental Indemnity Agreement of even date herewith. Guarantor hereby agrees
to indemnify, hold harmless and defend Bank from any such loss, expense or
damage, and this indemnity shall survive the satisfaction or foreclosure of the
Mortgage and the payment of the Note, and shall not be affected or limited by
any provision herein, including without limitation Paragraph 1(a).

                           (c)      If the Property is sold to a third party in
execution proceedings, the proceeds of such sale or, if the Property is sold to
Bank, the amount of the fair market value of the Property fixed by the court
(less the amount of the prior liens, costs, taxes and municipal claims not
discharged by such sale) shall be applied first to the Limited Recourse Portion
of Guarantor's liability hereunder and then to the Full Recourse Portion. Bank
shall have recourse against any an all assets of Guarantor for the amount of the
Full Recourse Portion remaining after such application.

                  2. Representations and Warranties. Guarantor represents and
warrants to Bank that:

                           (a)      Guarantor is a corporation duly organized,
validly existing and in good standing under the laws of Delaware and is in good
standing and authorized to do business in Pennsylvania and in those other
jurisdictions in which it does business;

                           (b)      This Guaranty has been duly executed and
delivered by Guarantor, and such execution and delivery and the performance by
Guarantor of its Obligations hereunder will not violate Guarantor's articles of
incorporation or bylaws or any applicable provision of law or judgment, order or
regulation of any court or of any public or governmental agency or authority,
nor conflict with or constitute a breach of or a default under any instrument to
which Guarantor is a Party or by which Guarantor or Guarantor's property is
bound, and this Guaranty is a valid and binding obligation of Guarantor
enforceable in accordance with its terms;

                                       2

<PAGE>   3

                           (c)      There is no litigation, proceeding or
investigation pending or, to the knowledge of Guarantor, threatened against
Guarantor, the adverse result of which might in any material respect affect the
business, properties or financial condition of Guarantor or the performance by
Guarantor of its obligations hereunder except such as has been disclosed to Bank
in writing, an Guarantor is not in violation in any material respect of any
statute, rule, order or regulation any governmental body applicable to
Guarantor;

                           (d)      The balance sheet and profit, loss and
surplus statement of Guarantor as of                         , 1998 are complete
and correct; were prepared in accordance with generally accepted accounting
principles consistently applied; said balance sheet accurately reflects all
liabilities of Guarantor, direct or contingent, as of the date thereof; and
there has occurred no material adverse change in the financial condition of
Guarantor as shown therein since a date thereof, except such changes as have
been heretofore disclosed to Bank in writing; and

                           (e)      Guarantor has filed all federal, state and
local tax returns required to be filed (or has obtained valid extensions of the
dates on which such returns are required to be filed) and as paid all taxes as
shown on the said returns to be due.

                  3.       General Terms and Conditions.

                           (a)      All payments by Guarantor hereunder shall be
made in lawful money of the United States of America.

                           (b)      Guarantor hereby waives (i) notice of
acceptance of this Guaranty and of any action by Bank in reliance thereon, (ii)
presentment, demand of payment, notice of dishonor or nonpayment, protest and
notice of protest with respect to the Obligations, and giving any notice of
default or other notice to, or making any demand on anyone (including without
limitation Borrower and Guarantor) liable in any manner for the payment of the
Obligations (except as provided below), (iii) any right to require Bank to
proceed initially against Borrower upon any default in the payment or
performance of the Obligations, and (iv) notice of any election by Bank to sell
any of the property mortgaged, assigned or pledged as security for any of the
Obligations at a public or private sale, provided that nothing contained in this
paragraph shall be deemed to be a waiver of any notice expressly required to be
given to Borrower pursuant to the Note or the Mortgage.

                           (c)      Bank may at any time and from time to time
without the consent of or notice to Guarantor and without impairing or releasing
the obligations of Guarantor hereunder (i) exercise or refrain from exercising
any right or remedy against Borrower or others, including without limitation
Guarantor, (ii) modify, amend, extend, supplement or waive or consent to the
breach of any provision of the Note or any of the Loan Documents, and (iii)
release or accept a substitute for any collateral for the Loan, to which
modifications, amendments, extensions, supplements, waivers and consents
Guarantor hereby assents. Without limiting the foregoing, it is specifically
understood that any modification, limitation or discharge of Borrower's
liability under the Note or the Mortgage on any of the Loan Documents arising
out of or by virtue of any bankruptcy, arrangement, reorganization or similar
proceeding for relief of debtors under federal

                                       3

<PAGE>   4

or state law hereinafter initiated by or against Borrower shall not affect,
modify, limit or discharge the liability of Guarantor in any manner and this
Guaranty shall remain in full force and effect and shall be enforceable against
Guarantor to the same extent and with the same effect as if such proceedings had
not been instituted.

                           (d)      The guaranty and surety contained in
paragraph 1 hereof is absolute and unconditional, primary, direct and immediate
and shall be valid and binding upon Guarantor regardless of any (i) invalidity,
irregularity, defect or unenforceability of or in the Note or any of the Loan
Documents or any other obligation or agreement of Borrower or Guarantor, (ii)
any action or inaction by Bank or other occurrence referred to in subsection
3(c) above, or (iii) any other circumstance which might otherwise constitute a
defense available to, or a discharge or release of, Borrower or a guarantor, by
operation of law.

                           (e)      No failure or delay on the part of Bank in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies of Bank
hereunder are cumulative and concurrent and not exclusive of any other rights or
remedies Bank may have.

                           (f)      No set-off, counterclaim, reduction or
diminution of an obligation, or any defense of any kind or nature that Guarantor
has or may have against Borrower or Bank shall affect, modify or impair
Guarantor's obligations hereunder.

                           (g)      Any claim that Guarantor now or hereafter
has against Borrower by way of subrogation, reimbursement, exoneration,
contribution or indemnification arising from this Guaranty, shall be fully
subordinate in priority of payment and lien to any claim Bank now or hereafter s
against Borrower. If any amount shall be paid to Guarantor on account of any
such subrogation or other right, at any time, such amount shall be held in trust
for the benefit of the Bank d shall forthwith be paid to the Bank to be credited
and applied to the Obligations, whether matured or unmatured.

                           (h) Guarantor will furnish Bank with true, complete
and correct copies of (i) annual financial statements audited by an independent
certified public accountant or as submitted to the Securities and Exchange
Commission, no later than April 30 of each year, and (ii) such additional
financial information as Bank may reasonably request from time to time. All
data, statements and information shall be in form and content reasonably
satisfactory to Bank. Guarantor shall timely file all tax returns (subject to
lawful extensions of time for fling), and shall furnish Bank evidence thereof
within ten days after Bank requests such filing.

                           (i)      Upon the occurrence and during the
continuance of any Event of Default, Bank is hereby authorized at any time and
from time to time to set off against any or all of the property of Guarantor in
Bank's possession (including all deposits and other indebtedness owing by Bank
to or for the credit or the account of Guarantor) at or subsequent to the
occurrence of the Event of Default any and all of the obligations of Guarantor
now or hereafter

                                       4

<PAGE>   5

existing under this Guaranty, irrespective of whether or not Bank shall have
made any demand under this Guaranty and although such obligations may be
contingent and unmatured.

                           (j)      Bank and Guarantor hereby waive all right to
a trial by jury in any litigation relating to this Guaranty.

                  4.       Termination. This Guaranty shall terminate and be of
no further force or effect upon a payment in full of all of the Obligations,
provided that this Guaranty shall continue to be effective or be reinstated, as
the case may be, if at any time payment of any of the obligations is rescinded
or must otherwise be returned by Bank upon the bankruptcy, arrangement,
reorganization or similar proceeding for relief of debtors under state or
federal law, all as though such payment had not been made.

                  5.       Warranty of Attorney. Guarantor hereby authorizes and
empowers any attorney or attorneys or the prothonotary or clerk of any court of
record in the Commonwealth of Pennsylvania, upon the occurrence of an Event of
Default, to appear for Guarantor in any such court, with or without declaration
filed, as of any term or time there or elsewhere to be held and therein to
confess or enter judgment against Guarantor in favor of Bank for all sums due or
to become due from Guarantor to Bank under this Guaranty, with costs of suit and
release of errors and with the lesser of five percent (5%) of such sums or
$10,000.00 added as reasonable attorneys' fees; and for doing so this Guaranty
or copy verified by affidavit shall be sufficient warrant. Such authority and
power shall of be exhausted by any exercise thereof, and judgment may be
confessed as aforesaid from time to time as often as there is occasion therefor.

                  6.       Miscellaneous.

                           (a)      This Guaranty shall bind Guarantor and
Guarantor's successors and assigns and shall inure to the benefit of Bank and
its successors and assigns.

                           (b)      Any notice, demand or request under this
Guaranty shall be in writing, and shall be delivered by personal service or
shall be sent by recognized overnight delivery service or by postage prepaid,
registered or certified mail, return receipt requested, addressed, if to
Guarantor or Bank, at the respective address set forth in the heading of this
Guaranty, or at such other address as the addressee may designate in writing.
Each notice, demand or request hereunder shall be deemed given on the date it is
delivered, in the case of personal service, or the date it is deposited with the
Postal Service, in the case of certified or registered mail or the date it is
delivered in the case of overnight delivery.

                           (c)      Guarantor (a) hereby irrevocably submits to
the nonexclusive jurisdiction of the Court of Common Pleas of Delaware County,
Commonwealth of Pennsylvania, or any successor to said court, and to the
nonexclusive jurisdiction of the United States District Court for the Eastern
District of Pennsylvania, or any successor to said court (hereinafter referred
to as the "Pennsylvania Courts") for purposes of any suit, action or other
proceeding which relates to this Guaranty, (b) to the extent permitted by
applicable law, hereby waives and agrees not to assert by way of motion, as a
defense or otherwise in any such suit, action or proceeding, any claim that
Guarantor is not personally subject to the jurisdiction of the

                                       5

<PAGE>   6

Pennsylvania Courts; that such suit, action or proceeding is brought in an
inconvenient forum; that the venue of such suit, action or proceeding is
improper; or that this Guaranty may not be enforced in or by the Pennsylvania
Courts, (c) hereby agrees not to seek, and hereby waives, any collateral review
by any other court, which may be called upon to enforce the judgment of any of
the Pennsylvania Courts, of the merits of any such suit, action or proceeding or
the jurisdiction of the Pennsylvania Courts, and (d) waives personal service of
any and all process upon Guarantor and consents that all such service of process
be made by certified or registered mail, and service so made shall be deemed to
be completed upon actual receipt thereof. Nothing herein shall limit the Bank's
right to bring any suit, action or other proceeding against any of Guarantor's
assets or to serve process on Guarantor by any means authorized by law for any
claim arising hereunder.

                           (d)      No amendment, notification or release from
or waiver of any provision hereof shall be effective unless in writing and
signed by Bank and shall be effective only in the specific instance and for the
specific purpose for which given.

                           (e)      This Guaranty and the rights and obligations
hereunder shall be construed in accordance with and governed by the substantive
laws of the Commonwealth of Pennsylvania.

                           (f)      The paragraph headings used herein are for
convenience only and do not affect or modify the terms and conditions hereof.

                           (g)      If any  provision  hereof is found by a
court of competent jurisdiction to be prohibited or unenforceable it shall be
ineffective only to the extent of such prohibition or unenforceability, and such
prohibition or unenforceability shall not invalidate the balance of such
provision to the extent it is not prohibited or unenforceable, nor invalidate
the other provisions hereof, all of which shall be liberally construed in favor
of Bank in order to effect the provisions hereof.

              [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                       6

<PAGE>   7

                  IN WITNESS WHEREOF, Guarantor has caused this Agreement to be
duly executed as of the day and year first above written.

                                               ALTERNATIVE LIVING SERVICES, INC.

                                               By:      /s/ Thomas E. Komula
                                                  ------------------------------
                                               Name:    Thomas E. Komula
                                                    ----------------------------
                                               Title:   Senior Vice President
                                                     ---------------------------

                                       7<PAGE>   1
                                                              EXHIBIT 10.127

                     SCHEDULE OF PROPERTIES MORTGAGED UNDER
            SOVEREIGN BANK OPEN-END MORTGAGE AND SECURITY AGREEMENT
      ATTACHED AS EXHIBIT 10.125 TO THE COMPANY'S FORM 10-K FOR THE PERIOD
                                ENDING 12/31/99

<TABLE>
<CAPTION>
                                                                                                                       DATE OF
MORTGAGOR                 FACILITY NAME                             LOCATION                      MORTGAGE AMOUNT      MORTGAGE

<S>                       <C>                                       <C>                             <C>             <C>
ALS-Clare Bridge, Inc.    Alterra Clare Bridge of East Hempfield    1870 Rohrerstown Road           $3,450,000       December, 1997
                                                                    Lancaster, PA  17601

ALS-Clare Bridge, Inc.    Alterra Clare Bridge of State College     610 W. Whitehall Road           $3,450,000         May, 1998
                                                                    State College, PA  16801

ALS-WovenHearts, Inc.     Alterra Sterling House of Chambersburg    745 Norland Avenue              $3,377,216         May, 1998
                                                                    Chambersburg, PA  17201

ALS-Wynwood, Inc.         Alterra Wynwood of New Castle             501 South Harmony road          $6,001,700         May, 1998
                                                                    Newark, DE
</TABLE>

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00005-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00005-of-00352.parquet"}]]