After the determination that the private institution of higher learning shall reasonably be expected to produce sufficient revenue over a period of twenty-five (25) years to pay the revenue bonds issued for the financing or refinancing of the educational facility project, as well as the interest on the revenue bonds and a reasonable sum for maintenance, renewal and replacement, has been made by the Authority, and before the issuance of the revenue bonds, the private institution of higher learning shall enter into a bond loan agreement with the Authority for the purposes of: (a) establishing the terms for the payment of the revenue bonds by the participating private institution of higher learning; (b) establishing the collateral of the participating private institution of higher learning which the parties determine to be necessary to secure the payment of the revenue bonds; (c) establishing the terms for the payment by the Authority to the participating private institution of higher learning of the proceeds from the sale of the revenue bonds for the payment of the costs of the educational facilities project by the participating private institution of higher learning; and (d) setting forth all other matters relating to the revenue bonds.

The bond loan agreement shall also provide that, for as long as the participating private institution of higher learning, or any voluntary grantee of the participating private institution of higher learning, shall own the educational facility which is the subject of the educational facility project, or any part thereof, said educational facility, or any part thereof, shall not be used for sectarian instruction or as a place of religious worship, or used in connection with any part of the program of a school or department of divinity of any religious denomination or sect. This provision shall hereinafter be referred to as “the sectarian use provision” of the bond loan agreement. The bond loan agreement shall set forth the legal description of the real property of the educational facility and the bond loan agreement shall be recorded by the participating private institution of higher learning in the land records of the county (or the applicable judicial district of a county) in which the educational facility is located or is to be located. The bond loan agreement may be recorded in its full text or in a short form evidencing: (a) the names and addresses of the parties; (b) the date of the bond loan agreement; (c) the legal description of the educational facility; (d) a brief summary of the subject matter of the bond loan agreement; and (e) the full text of the sectarian use provision of the bond loan agreement.

The participating private institution of higher learning shall also execute to the Authority, for the benefit of the State of Mississippi, all instruments necessary to perfect in the State of Mississippi a lien or security interest or both, which are first in priority over all other liens and security interests, in the collateral property of the participating private institution of higher learning identified in the bond loan agreement. All such instruments shall contain the full text of the sectarian use provision of the bond loan agreement.