Exhibit 10.5

Execution Version

THIS AGREEMENT, THE INDEBTEDNESS EVIDENCED HEREBY OR ANY LIEN OR SECURITY
INTEREST OR COLLATERAL SECURING SUCH INDEBTEDNESS, IS SUBORDINATED, IN THE
MANNER AND TO THE EXTENT SET FORTH IN AN AGREEMENT DATED AS OF NOVEMBER 13, 2013
(AS SUCH AGREEMENT MAY FROM TIME TO TIME BE AMENDED, RESTATED, MODIFIED, OR
SUPPLEMENTED, THE “SUBORDINATION AGREEMENT”), BY THE OBLIGOR AND OBLIGEE OF THIS
AGREEMENT IN FAVOR OF BANK OF AMERICA, N.A. AS ADMINISTRATIVE AGENT FOR THE
“LENDERS” REFERRED TO THEREIN, TO ALL SENIOR INDEBTEDNESS (AS DEFINED THEREIN),
AND EACH HOLDER OF OBLIGATIONS UNDER THIS AGREEMENT, BY ITS ACCEPTANCE HEREOF,
SHALL BE BOUND BY THE SUBORDINATION AGREEMENT.

FINANCIAL SUPPORT AGREEMENT

This Financial Support Agreement (“Agreement”) is entered into by and between
Enbridge Energy Partners, L.P., a Delaware limited partnership (“EEP”), and
Midcoast Operating, L.P., a Texas limited partnership (“Midcoast”). The
effective date of this Agreement is November 13, 2013 (the “Effective Date”).

RECITALS

WHEREAS, Midcoast has been a wholly owned subsidiary of EEP;

WHEREAS, Midcoast and its wholly owned subsidiaries have relied upon (a) EEP’s
credit facilities for the issuance of letters of credit required in connection
with commodity derivative contracts to which Midcoast and its wholly owned
subsidiaries are parties, and (b) parental guarantees from EEP for certain
financial and performance obligations under commodity derivative contracts and
natural gas and natural gas liquid (“NGL”) purchase agreements to which Midcoast
and its wholly owned subsidiaries are parties;

WHEREAS, in connection with the initial public offering (the “IPO”) of common
units representing limited partner interests in Midcoast Energy Partners, L.P.,
a Delaware limited partnership (“MEP”), EEP will contribute to MEP an aggregate
39% partnership interest in Midcoast; and

WHEREAS, in connection with the IPO, both EEP and Midcoast propose to enter into
this Agreement, whereby EEP will continue to facilitate the issuance of letters
of credit for the benefit of Midcoast and its wholly owned subsidiaries under
EEP’s credit facilities and to provide parental guarantees to Midcoast and its
subsidiaries on the terms and conditions set forth herein.

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AGREEMENT

NOW, THEREFORE, in accordance with the foregoing recitals, and as consideration
for the mutual covenants, agreements and promises hereinafter set forth and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties to this Agreement hereby agree as follows:

Section 1 – Letters of Credit.

(a) On or prior to the Effective Date, Midcoast shall have provided to EEP a
schedule of all letters of credit that (i) have been made available by EEP on
behalf of or for the benefit of Midcoast and its wholly owned subsidiaries under
EEP’s credit facilities in connection with commodity derivative contracts and
natural gas and NGL purchase agreements to which Midcoast or any of its wholly
owned subsidiaries is party and (ii) are outstanding on the Effective Date (the
“Effective Date LOC Schedule”). Subject to Section 1(b), EEP hereby agrees that
it shall take all commercially reasonable efforts to cause each letter of credit
set forth on the Effective Date LOC Schedule to remain outstanding in accordance
with its terms.

(b) From time to time upon at least five (5) business days’ advance written
notice from Midcoast, EEP shall (i) cause to be provided additional letters of
credit in connection with any commodity derivative contract or natural gas or
NGL purchase agreement which Midcoast or any of its wholly owned subsidiaries
informs EEP that it will enter into, or (ii) amend the terms of any outstanding
letters of credit, including increasing or decreasing the face amount of any
outstanding letter of credit, in each case on behalf of or for the benefit of
Midcoast and its wholly owned subsidiaries; provided, however, that in no event
shall EEP be required to provide additional letters of credit or amend any
outstanding letter of credit if doing so would cause (x) the sum of (i) the
aggregate Letter of Credit Amount and (ii) the aggregate Parental Guarantee
Amount (each as defined below) to exceed $700 million or (y) the obligations of
EEP thereunder to extend beyond the Term (as defined below). The “Letter of
Credit Amount” represents the aggregate face value, in U.S. dollars, of letters
of credit outstanding at the close of business on any business day, after taking
into account any changes in such amount since the close of business on the
immediately preceding business day.

(c) During the Term, Midcoast shall update the Effective Date LOC Schedule as of
each Month-End to reflect changes in the outstanding Letter of Credit Amount
(such updated schedule, the “Current LOC Support Schedule”). Midcoast shall
provide a copy of the Current LOC Support Schedule to EEP at any time promptly
following EEP’s written request. The term “Month-End” means the completion of
Midcoast’s month-end accounting procedures to ensure that all accounting
transactions are posted and reflected on the appropriate month’s financial
reports, which for purposes of this Agreement shall be considered complete with
respect to the immediately preceding month as of the tenth (10th) business day
of the current month.

(d) No later than the tenth (10th) business day following each Month-End,
Midcoast shall provide to EEP a report identifying (i) the monthly average
Letter of Credit Amount with respect to the immediately preceding month and
(ii) the monthly average Parental Guarantee Amount (as defined below).

(e) To the extent that EEP is required to pay any amount under or in connection
with any payment under any letter of credit covered by this Agreement, Midcoast
hereby agrees to reimburse EEP promptly on demand for the full amount of such
payment, together with interest at the Default Rate from the date of EEP’s
payment through the date of reimbursement by

 

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Midcoast. The “Default Rate” means, as of any date of determination, the
prevailing one-month LIBOR rate as quoted on the Bloomberg BTMM screen on such
date of determination plus 250 bps per annum. At all times that any
subordination agreement, as contemplated by Section 3, shall be in effect,
accrued and unpaid interest on any amounts due hereunder, when due and payable
(except on termination hereof, as herein provided), may, if cash payments in
respect of such interest are not permitted under such subordination agreement
and upon at least five (5) business days’ advance written notice from Midcoast,
be paid in the form of additional indebtedness of Midcoast in favor of EEP,
which additional indebtedness shall be in the principal amount of such due and
payable accrued interest and will bear interest on the same terms as any other
principal obligations of Midcoast under this paragraph, and otherwise of like
tenor and terms of this Agreement, it being acknowledged and agreed by EEP that
payment of such interest amounts by the issuance of such additional indebtedness
shall constitute full and timely payment of such interest amounts when they are
due.

Section 2 – Parental Guarantees.

(a) On or prior to the Effective Date, Midcoast shall have provided to EEP a
schedule of all parental guarantees that (i) have been provided by EEP on behalf
of or for the benefit of Midcoast and its wholly owned subsidiaries in
connection with commodity derivative contracts and natural gas and NGL purchase
agreements to which Midcoast or any of its wholly owned subsidiaries is party
and (ii) are outstanding on the Effective Date (the “Effective Date Guarantee
Schedule”). Subject to Section 2(b), EEP hereby agrees that each parental
guarantee set forth on the Effective Date Guarantee Schedule shall remain
outstanding in accordance with its terms.

(b) From time to time upon at least five (5) business days’ advance written
notice from Midcoast, EEP shall (i) provide or cause to be provided additional
parental guarantees in connection with any commodity derivative contract or
natural gas or NGL purchase agreement which Midcoast or any of its wholly owned
subsidiaries plans to enter into, or (ii) amend the terms thereof, including
increasing or decreasing (or causing to be increased or decreased) the amount of
any outstanding parental guarantee, in each case on behalf of or for the benefit
of Midcoast and its subsidiaries; provided, however, that in no event shall EEP
be required to provide additional parental guarantees or amend any outstanding
parental guarantee if doing so would cause (x) the sum of (i) the aggregate
Letter of Credit Amount and (ii) the aggregate Parental Guarantee Amount to
exceed $700 million or (y) the obligations of EEP thereunder to extend beyond
the Term. The “Parental Guarantee Amount” represents the aggregate Net
Realizable Financial Obligation (as defined below) of Midcoast and its wholly
owned subsidiaries under their respective commodity derivative contracts and
natural gas and NGL purchase agreements that are guaranteed by EEP, in each case
after taking into account market fluctuations in commodity prices, any related
EEP letters of credit and any increases or decreases to the obligations
underlying each guarantee. “Net Realizable Financial Obligation” means (a) in
the case of outstanding commodity derivative contracts, the amount required to
terminate or discharge each such contract based upon current market prices of
the relevant commodity and (b) in the case of natural gas and NGL purchase
agreements, the outstanding amount owed for product received that would be
recorded as a liability under U.S. GAAP, in each case, net of any amounts owed
to Midcoast under any agreements with counterparties that have received
guarantees from EEP.

 

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(c) During the Term, Midcoast shall update the Effective Date Guarantee Schedule
as of each Month-End to reflect changes in the outstanding guarantees (such
updated schedule, the “Current Guarantee Support Schedule”). Midcoast shall
provide a copy of the Current Guarantee Support Schedule to EEP at any time
promptly following EEP’s written request.

(d) To the extent that EEP is required to pay any amounts under any outstanding
parental guarantee covered by this Agreement, Midcoast hereby agrees to
reimburse EEP promptly upon demand for the full amount of such payments,
together with interest at the Default Rate from the date of EEP’s payment
through the date of reimbursement by Midcoast. At all times that any
subordination agreement, as contemplated by Section 3, shall be in effect,
accrued and unpaid interest on any amounts due hereunder, when due and payable
(except on termination hereof, as herein provided), may, if cash payments in
respect of such interest are not permitted under such subordination agreement
and upon at least five (5) business days’ advance written notice from Midcoast,
be paid in the form of additional indebtedness of Midcoast in favor of EEP,
which additional indebtedness shall be in the principal amount of such due and
payable accrued interest and will bear interest on the same terms as any other
principal obligation of Midcoast under this paragraph, and otherwise of like
tenor and terms of this Agreement, it being acknowledged and agreed by EEP that
payment of such interest amounts by the issuance of such additional indebtedness
shall constitute full and timely payment of such interest amounts when they are
due.

Section 3 – Subordination and Lien Arrangements.

EEP agrees that at the request of the administrative agent (the “Administrative
Agent”) under MEP's principal commercial bank revolving credit facility (the
“MEP Revolving Credit Facility”), it will execute and deliver to the
Administrative Agent an agreement, in form and substance agreed between EEP and
the Administrative Agent, that expressly subordinates EEP’s right to payment on
amounts due hereunder on the terms expressly provided therein; provided,
however, that Midcoast acknowledges and agrees that:

(a) the provisions of any such subordination agreement, as amended and in
effect, define the relative rights of EEP and the Administrative Agent, and
nothing contained therein is intended to or shall impair the obligations of
Midcoast hereunder, which are unconditional and absolute, to pay the amounts
owed and owing under this Agreement as and when the same shall become due and
payable in accordance with its terms, or to affect the relative rights of
creditors of Midcoast other than the relative rights of EEP and the
Administrative Agent, as therein expressly provided;

(b) Midcoast’s failure to make any payment (principal, interest, fees, costs,
expenses or otherwise) in respect of any amounts due hereunder when due because
such payment is prohibited by any such subordination agreement, as amended and
in effect, shall not prevent such failure from constituting a breach or default
under this Agreement, and

(c) until all amounts owed by Midcoast to EEP hereunder have been paid in full,
Midcoast may not, and shall not permit any of its affiliates to, grant or permit
any liens on any asset or property to secure the MEP Revolving Credit Facility,
unless it and each of them has granted or concurrently grants a Lien to EEP on
such asset or property to secure its obligations

 

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hereunder, on a second-priority basis, and Midcoast hereby expressly agrees, for
itself and its subsidiaries, to grant, create, perfect and maintain, and to
cause to be granted, created, perfected and maintained, liens on its and their
assets and properties in favor of EEP, to secure all amounts from time to time
owing hereunder, in scope, nature, type of, but second priority to, the liens at
any time, and from time to time, granted, created, perfected and maintained to
secure the MEP Revolving Credit Facility.

Without limiting the generality of the foregoing, Midcoast specifically
acknowledges and agrees that the provisions of any such subordination agreement,
as amended and in effect, are not for the benefit of, and may not be enforced
by, Midcoast or any other obligors of the MEP Revolving Credit Facility.

Section 4 – Financial Support Fee.

As consideration for the financial support provided by EEP under this Agreement,
during the Term (as defined below), Midcoast shall pay a Financial Support Fee
(as defined below) to EEP on or before the thirty-fifth (35th) day following
each Month-End. The “Financial Support Fee” shall equal the product of (a) the
sum of (i) the average monthly Letter of Credit Amount for the immediately
preceding month and (ii) the average monthly Parental Guarantee Amount for the
immediately preceding month and (b) 250 bps, divided by twelve.

Section 5 – Representations and Warranties of EEP.

EEP hereby represents and warrants as follows:

(a) Organization and Good Standing. EEP is a limited partnership duly organized
and validly existing under the laws of the State of Delaware. EEP has all
necessary limited partnership power and authority to execute and deliver this
Agreement, to own its properties and assets and to carry on its business as now
conducted and to perform its obligations hereunder.

(b) Authorization. The execution and delivery of this Agreement by EEP, and the
compliance by EEP with the provisions of this Agreement have been duly and
validly authorized by all necessary limited partnership action on the part of
EEP. This Agreement, assuming the due authorization, execution and delivery
hereof by Midcoast, constitutes the legal, valid and binding obligation of EEP,
enforceable against EEP in accordance with its terms, except as limited by
(x) bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance
laws and other similar laws affecting creditors’ rights generally, and
(y) general principles of equity, regardless of whether asserted in a proceeding
in equity or at law.

(c) No Violation. Neither the execution nor delivery of this Agreement by EEP,
nor the compliance by EEP with any of the provisions of this Agreement, will:
(i) violate, conflict with, or result in a breach of any of the provisions of,
or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration, or the creation of any lien upon any of the common units
representing limited partner interests in EEP under, any of the terms,
conditions or provisions of EEP’s Certificate of Limited Partnership, as
amended, or Fifth Amended and Restated Agreement of Limited Partnership, as
amended, or any material contract, agreement or other instrument or obligation
to which EEP is a party or by which EEP may be bound, or to which EEP or any of
its properties or assets may be subject, or (ii) violate any order or law
applicable to EEP.

 

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Section 6 – Representations and Warranties of Midcoast.

Midcoast hereby represents and warrants as follows:

(a) Organization and Good Standing. Midcoast is a limited partnership duly
organized and validly existing under the laws of the State of Delaware. Midcoast
has all necessary limited partnership power and authority to execute and deliver
this Agreement, to own its properties and assets and to carry on its business as
now conducted and to perform its obligations hereunder.

(b) Authorization. The execution and delivery of this Agreement by Midcoast, and
the compliance by Midcoast with the provisions of this Agreement have been duly
and validly authorized by all necessary limited partnership action on the part
of Midcoast. This Agreement, assuming the due authorization, execution and
delivery hereof by EEP, constitutes the legal, valid and binding obligation of
Midcoast, enforceable against Midcoast in accordance with its terms, except as
limited by (x) bankruptcy, insolvency, moratorium, reorganization, fraudulent
conveyance laws and other similar laws affecting creditors’ rights generally,
and (y) general principles of equity, regardless of whether asserted in a
proceeding in equity or at law.

(c) No Violation. Neither the execution nor delivery of this Agreement by
Midcoast, nor the compliance by Midcoast with any of the provisions of this
Agreement, will: (i) violate, conflict with, or result in a breach of any of the
provisions of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or result in a right of
termination or acceleration, or the creation of any lien upon any of the common
units representing limited partner interests in Midcoast under, any of the
terms, conditions or provisions of Midcoast’s Certificate of Limited Partnership
or Amended and Restated Agreement of Limited Partnership or any material
contract, agreement or other instrument or obligation to which Midcoast is a
party or by which Midcoast may be bound, or to which Midcoast or any of its
properties or assets may be subject, or (ii) violate any order or law applicable
to Midcoast.

Section 7 – Term and Termination.

(a) Term. This Agreement will remain in effect until the earlier of (i) the
fourth (4th) anniversary of the Effective Date and (ii) the date on which EEP
owns, directly or indirectly (other than through its ownership interests in
MEP), less than 20% of the total outstanding limited partner interests of
Midcoast (the “Term”).

(b) Termination. This Agreement may be terminated prior to the expiration of the
Term:

(i) by Midcoast, in its sole discretion, upon providing thirty (30) days’
written notice to EEP;

 

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(ii) by either party, if the other party materially breaches any material
provision of this Agreement and either the breach cannot be cured or, if the
breach can be cured, it is not cured by the breaching party within thirty
(30) days after the breaching party’s receipt of written notice of such breach;

(iii) by EEP, effective immediately, in the event of a default under the credit
agreement governing the MEP Revolving Credit Facility (without regard to any
cure period thereunder); or

(iv) by either party, effective immediately, if the other party files, or has
filed against it, a petition for voluntary or involuntary bankruptcy or pursuant
to any other insolvency law, makes or seeks to make a general assignment for the
benefit of its creditors or applies for, or consents to, the appointment of a
trustee, receiver or custodian for a substantial part of its property.

(c) Effect of Term and Termination. Upon expiration of the Term or the earlier
termination of this Agreement, (i) the obligations of EEP to provide or cause to
be provided any letters of credit or guarantees under this Agreement, shall
cease, and Midcoast and its subsidiaries shall use all commercially reasonable
efforts, at their sole cost and expense, to facilitate the termination of such
letters of credit and guarantees and (ii) at the option and upon the demand of
EEP, all amounts then due and owing by Midcoast hereunder shall become due and
payable, and letters of credit and guarantees then outstanding shall be cash
collateralized or otherwise collateralized in amount and nature as requested by
EEP. Notwithstanding the immediately preceding sentence, any obligations of
Midcoast under Section 2(e), Section 3(e) and Section 4 of this Agreement that
have accrued but remain unpaid as of the expiration of the Term or the earlier
termination of this Agreement shall survive such expiration or termination.

Section 8 – Applicable Law and Forum. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.

Section 9 – Communications. All notices, requests, demands and other
communications under this Agreement (whether from EEP, Midcoast or any other
person or entity) shall be in writing and shall be deemed to have been duly
given: (a) on the date of service if served personally on the party to which
such notice is to be given; (b) on the date of transmission if sent via
facsimile transmission to the number given below, and telephonic confirmation of
transmission is obtained promptly after completion of transmission; (c) on the
day after delivery to Federal Express or similar overnight carrier or the
Express Mail Service maintained by the United States Postal Service; or (d) on
the fifth day after mailing, if mailed to the party to which such notice is to
be given, by first class mail, registered or certified, postage prepaid and
properly addressed, to the party as follows:

 

  If to EEP, to:    If to Midcoast, to:  

1100 Louisiana, Suite 3300

Houston, Texas 77002

Fax: (713) 821-2229

  

1100 Louisiana, Suite 3300

Houston, Texas 77002

Fax: (713) 821-2229

  Attention:    Attention:   Treasurer    Treasurer

 

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Section 10 – Amendments. Any amendment to this Agreement may be made only by a
written instrument executed by all parties to this Agreement.

Section 11 – Assignment. Without the prior written consent of each other party
to this Agreement, no party to this Agreement may assign its rights or
obligations under this Agreement in whole or in part.

Section 12 – No Third Party Beneficiaries. The agreement of EEP to provide or
cause to be provided letters of credit or guarantees hereunder for the account
of Midcoast and its wholly owned subsidiaries on the terms and conditions set
forth in this Agreement, is solely for the benefit of Midcoast and its wholly
owned subsidiaries and no other person or entity shall have any rights hereunder
against EEP or with respect to the extension of support contemplated hereby.

Section 13 – Special Exculpation. No claim may be made by Midcoast and its
wholly owned subsidiaries or any other person or entity against EEP or its
partners, or equity interest holders or any of its or their respective
directors, officers, employees, attorneys or agents of any of them for any
special, indirect, consequential or punitive damages in respect of any claim for
breach of contract or any other theory of liability arising out of or relating
to this Agreement or any other financing document or the transactions
contemplated hereby or thereby, or any act, omission or event occurring in
connection therewith and Midcoast hereby waives, releases and agrees not to sue
upon any claim for any such damages, whether or not accrued and whether or not
known or suspected to exist in its favor.

Section 14 – Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof and
supersedes all prior and contemporaneous agreements, understandings,
negotiations, and discussions, whether oral or written, of the parties. This
Agreement is binding on the successors and permitted assigns of the parties to
this Agreement.

 

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IN WITNESS WHEREOF, the parties hereto caused this Agreement to be executed by
their respective duly authorized representatives as of the day and year above
written.

 

ENBRIDGE ENERGY PARTNERS, L.P. By:   Enbridge Energy Management, L.L.C., as
delegate of Enbridge Energy Company, Inc., as General Partner By:  

/s/ Chris Kaitson

  Name:   Chris Kaitson   Title:   Vice President—Law and Assistant Secretary
MIDCOAST OPERATING, L.P. By:   Midcoast Holdings, L.L.C., as general partner of
Midcoast Energy Partners, L.P., as sole member of Midcoast OLP GP, L.L.C., as
general partner By:  

/s/ Chris Kaitson

  Name:   Chris Kaitson   Title:   Vice President—Law and Assistant Secretary

[Signature Page to Financial Support Agreement]