Section 3--606. Impairment of Recourse or of Collateral.

(1) The holder discharges any party to the instrument to the extent
that without such party's consent the holder

(a) without express reservation of rights releases or agrees not

to sue any person against whom the party has to the knowledge

of the holder a right of recourse or agrees to suspend the

right to enforce against such person the instrument or

collateral or otherwise discharges such person, except that

failure or delay in effecting any required presentment,

protest or notice of dishonor with respect to any such person

does not discharge any party as to whom presentment, protest

or notice of dishonor is effective or unnecessary; or

(b) unjustifiably impairs any collateral for the instrument given

by or on behalf of the party or any person against whom he

has a right of recourse.

(2) By express reservation of rights against a party with a right of
recourse the holder preserves

(a) all his rights against such party as of the time when the

instrument was originally due; and

(b) the right of the party to pay the instrument as of that time;

and

(c) all rights of such party to recourse against others.