SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934

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Check the appropriate box:

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14a-6(e)(2))
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[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12

UGI CORPORATION
(Name of Registrant as Specified in Its Charter)

____________________________________
(Name of Person(s) Filing Proxy Statement
if Other Than Registrant)

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[x] No fee required.
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[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and O-11

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LOGO

460 North Gulph Road
King of Prussia, PA 19406
610-337-1000

December 27, 1996

Dear Shareholder,

On behalf of our entire Board of Directors, I cordially invite you to attend
our Annual Meeting of Shareholders on Tuesday, February 25, 1997. Information
about the formal matters to be acted on at the meeting is contained in the
accompanying Notice of Meeting and Proxy Statement. We are also enclosing the
1996 Annual Report describing our businesses along with this Proxy Statement.
At the meeting, we plan to discuss the results of our operations during fiscal
year 1996 and our expectations for the Company in fiscal year 1997.

We look forward to greeting personally as many of our shareholders as will
be able to attend the meeting. Whether or not you expect to attend the
meeting, please take a moment now to complete, sign and date the enclosed
proxy and return it in the postage-paid envelope we have provided. If you
attend the meeting, you may vote in person if you wish, even though you have
previously returned your proxy, provided you give written notice of the
revocation of your proxy to the Corporate Secretary.

Sincerely,

/s/ Lon R. Greenberg

Lon R. Greenberg
Chairman of the Board

UGI CORPORATION
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS

- - -------------------------------------------------------------------------------
DATE AND TIME:

Tuesday, February 25, 1997, 10:00 A.M. (Local Time)

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PLACE:

Sheraton Valley Forge Hotel
Grand Ballroom
North Gulph Road and First Avenue
King of Prussia, Pennsylvania 19406

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AGENDA:

1. Election of nine directors to serve until the next annual meeting of
shareholders.

2. Approval of the Company's Directors' Equity Compensation Plan.

3. Approval of the Company's 1997 Stock Option and Dividend Equivalent Plan.

4. Ratification of the appointment of Coopers & Lybrand L.L.P. as independent
certified public accountants for fiscal year 1997.

5. Transaction of such other business as may properly come before the meeting.

- - -------------------------------------------------------------------------------

BARTON D. WHITMAN
Corporate Secretary

UGI CORPORATION
460 North Gulph Road
King of Prussia, PA 19406

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PROXY STATEMENT

- - --------------------------------------------------------------------------------

December 27, 1996

ANNUAL MEETING INFORMATION

The Annual Meeting of Shareholders of UGI Corporation ("UGI" or the
"Company") will be held on February 25, 1997. At the meeting, you will be
asked to consider the election of directors, the approval of the Directors'
Equity Compensation Plan, the approval of the 1997 Stock Option and Dividend
Equivalent Plan, and the appointment of independent certified public
accountants for the Company. This proxy statement, prepared under the
direction of the Company's Board of Directors as a basis for soliciting your
proxy for use at the meeting, is being mailed to shareholders on or about
December 27, 1996.

VOTING RIGHTS

Only holders of the Company's Common Stock, without par value ("Common
Stock"), at the close of business on December 13, 1996 will be entitled to
vote at the meeting. As of December 13, 1996, there were outstanding
33,128,109 shares of the Company's Common Stock. Each holder of shares of the
Company's Common Stock is entitled to one vote per share on all matters to be
voted on at the meeting. Votes cast by proxy or in person at the meeting will
be counted by the transfer agent for the Company, ChaseMellon Shareholder
Services, Inc. (acting through its representatives).

The director nominees are to be elected by a plurality of the votes cast at
the meeting. All other matters to be considered at the meeting require the
affirmative vote of a majority of the votes cast at the meeting to be
approved. Abstentions are counted for purposes of determining the presence or
absence of a quorum, but are not considered a vote cast under Pennsylvania
law. Shares held by brokers in street name and for which the beneficial
owners' discretion has been withheld ("broker non-votes") are counted for
purposes of determining the presence or absence of a quorum, but are not
considered a vote cast under Pennsylvania law and will not affect the outcome
of a matter to be voted upon.

USE AND REVOCATION OF PROXIES

Each properly executed proxy received in time for the meeting will be voted
in accordance with the choices marked on it. If you sign your proxy but do not
mark your choices, your proxy will be voted for the persons nominated for
election as directors, in favor of approval of the Directors' Equity
Compensation Plan, in favor of approval of the 1997 Stock Option and Dividend
Equivalent Plan, and in favor of ratification of the appointment of Coopers &
Lybrand L.L.P. as independent certified public accountants for fiscal year
1997. If you wish to revoke your proxy, you may do so by giving written notice
of revocation to Mr. Barton D. Whitman, Corporate Secretary, UGI Corporation,
460 North Gulph Road, King of Prussia, Pennsylvania 19406, before your proxy
is voted.

SOLICITATION OF PROXIES

Proxies are being solicited by mail from all holders of record of the
Company's Common Stock. In addition to the solicitation by mail, certain
directors, officers and regular employees of the Company and its subsidiaries,
without additional compensation, may solicit proxies personally or by
telephone

or facsimile. The Company has also engaged Corporate Investor Communications,
Inc. to solicit proxies for the Company for a fee of $8,000 plus expenses.
Banks, brokerage firms and other institutions, nominees, custodians and
fiduciaries will, upon request, be reimbursed by the Company for reasonable
expenses incurred in sending proxy materials to beneficial owners of the
Company's Common Stock.

SHAREHOLDER PROPOSALS

Shareholders may submit proposals on matters appropriate for shareholder
action at future annual meetings in accordance with regulations adopted by the
United States Securities and Exchange Commission ("SEC"). For such proposals
to be considered for inclusion in the Company's proxy statement and form of
proxy for next year's annual meeting, they must be received by the Company not
later than August 28, 1997. Proposals should be directed to the attention of
the Corporate Secretary.

SECURITY OWNERSHIP OF MANAGEMENT

The table below sets forth as of November 1, 1996, the beneficial ownership
of UGI Common Stock by each director and each of the Named Executives (as
defined under the heading "Executive Compensation"), as well as by the
directors and all of the Company's executive officers as a group.

AmeriGas Propane, Inc. ("AmeriGas Propane"), a subsidiary of the Company, is
the General Partner of AmeriGas Partners, L.P. The table below also sets forth
as of November 1, 1996, the beneficial ownership of AmeriGas Partners, L.P.
Common Units by each director and each of the Named Executives, as well as by
the directors and all of the Company's executive officers as a group.

TABLE OF EQUITY OWNERSHIP
OF DIRECTORS AND EXECUTIVE OFFICERS

- - --------------------------------------------------------------------------------------------

TITLE OF NAME OF BENEFICIAL AMOUNT AND NATURE OF PERCENT
CLASS OWNER BENEFICIAL OWNERSHIP(1)(2) OF CLASS
- - --------------------------------------------------------------------------------------------

UGI Corporation James W. Stratton 6,275 *
Robert C. Forney 8,675 *
David I. J. Wang 19,275 *
Richard C. Gozon 11,275 *
Cyrus H. Holley 6,275 *
Quentin I. Smith, Jr. 7,275 *
Stephen D. Ban 8,311(3) *
Anne Pol 3,324 *
Lon R. Greenberg 147,677(4) *
Richard L. Bunn 137,100(5) *
Robert C. Mauch 120,714 *
George W. Westerman 129,862(6) *
Charles L. Ladner 124,086(7) *
Michael J. Cuzzolina 39,324 *
Directors and executive
officers as a group (16
persons including those
listed above) 789,498 2.38%
AmeriGas Partners, L.P. James W. Stratton 1,000 *
Common Units Robert C. Forney 1,600 *
David I. J. Wang 5,000 *
Cyrus H. Holley 1,000 *
Lon R. Greenberg 1,500(8) *
Robert C. Mauch 1,500 *
George W. Westerman 1,000 *
Charles L. Ladner 1,000 *
Directors and executive
officers as a group (16
persons including those
listed above) 13,600 *

* Less than 1 percent.

(1) The number of shares of UGI Common Stock subject to stock options
exercisable through January 2, 1997, which number is included in the
number of shares shown as beneficially owned, is as follows: Mr. Stratton,
5,000 shares; Dr. Forney, 4,000 shares; Mr. Wang, 5,000 shares; Mr. Gozon,
5,000 shares;

Mr. Holley, 5,000 shares; Mr. Smith, 5,000 shares; Dr. Ban, 3,800 shares;
Mrs. Pol, 2,124 shares; Mr. Greenberg, 122,778 shares; Mr. Bunn, 87,500
shares; Mr. Mauch, 87,500 shares; Mr. Westerman, 87,500 shares; Mr. Ladner,
87,500 shares; Mr. Cuzzolina, 30,000 shares; and all directors and executive
officers as a group, 553,368 shares.
(2) The nature of beneficial ownership, other than the number of shares
subject to options exercisable through January 2, 1997, is sole voting and
dispositive power, except as noted below.
(3) Shares are held jointly with Dr. Ban's spouse.
(4) Includes 22,759 shares held jointly with Mr. Greenberg's spouse.
(5) Includes 45,902 shares held jointly with Mr. Bunn's spouse and 2,000
shares held directly by his spouse.
(6) Includes 25,804 shares held jointly with Mr. Westerman's spouse, 4,000
shares held jointly with his children and 306 shares held directly by his
spouse.
(7) Shares are held jointly with Mr. Ladner's spouse.
(8) Units are held in Mr. Greenberg's name as custodian for his children.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table sets forth certain information regarding each person
known by the Company to have been the beneficial owner of more than 5% of the
Company's Common Stock. The ownership information shown below is based on
information received from Technimetrics, Inc. reporting a Form 13F filed with
the U. S. Securities and Exchange Commission in September, 1996 by Sasco
Capital, Inc.

TABLE OF EQUITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS

- - --------------------------------------------------------------------------------------

TITLE OF NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS(1)
- - --------------------------------------------------------------------------------------

Common Stock Sasco Capital, Inc. 2,635,000 7.95%
Ten Sasco Hill Road
Fairfield, CT 06430

(1) Based on 33,136,225 shares of the Company's Common Stock issued and
outstanding at September 30, 1996.

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ITEM 1 -- ELECTION OF DIRECTORS
- - --------------------------------------------------------------------------------

You will be asked at the meeting to elect a nine-member Board of Directors
to serve until the next annual meeting of shareholders and until their
successors are duly elected and qualified. Should any nominee be unavailable
for election, proxies will be voted for another person nominated by the Board
of Directors or the size of the Board will be reduced.

Nine of the ten members of the Board of Directors elected at last year's
annual meeting are standing for election this year. As previously announced,
James A. Sutton retired as a Director and Chairman of the Board on July 31,
1996.

The following table names each nominee and gives information concerning his
or her principal occupation for the past five years and the year of his or her
election to the Board of Directors.

NOMINEES

- - ---------------------------------------------------------------------------------------

UGI
PRINCIPAL OCCUPATION DIRECTOR
NAME AND AGE AND OTHER DIRECTORSHIPS(1) SINCE
- - ---------------------------------------------------------------------------------------

James W. Stratton President of Stratton Management Company (investment 1979
(60) advisory and financial consulting firm); Chairman
and Chief Executive Officer of FinDaTex (financial
services firm). Director: AmeriGas Propane, Inc.;
Stratton Growth Fund; Stratton Monthly Dividend
Shares, Inc.; Stratton Small-Cap Yield Fund; Alco
Standard Corporation; Teleflex, Inc.
Robert C. Forney Retired; formerly Executive Vice President (1981 to 1988
(69) 1989) and Director (1979 to 1989) of E. I. duPont de
Nemours & Co., Inc. (chemicals and petroleum
products). Director: AmeriGas Propane, Inc.;
Wilmington Trust Corporation; Wilmington Trust
Company; Wilmington Trust of Pennsylvania.
David I. J. Wang Retired; formerly Executive Vice President--Timber 1988
(64) and Specialty Products and a Director of Interna-
tional Paper Company (1987 to 1991). Director:
AmeriGas Propane, Inc.; Weirton Steel Corp.
Richard C. Gozon Executive Vice President of Weyerhaeuser Company 1989
(58) (pulp, paper and packaging) (since 1994); formerly
Director (1984 to 1993), President and Chief Operat-
ing Officer of Alco Standard Corporation (provider
of paper and office products) (1988 to 1993); Execu-
tive Vice President and Chief Operating Officer
(1987); Vice President (1982 to 1988); President
(1979 to 1987) of Paper Corporation of America. Di-
rector: AmeriSource Health Corporation; Triumph
Group, Inc.
Cyrus H. Holley President and sole owner of Management Consulting 1990
(60) Services (business and educational resource and man-
agement consulting firm) (1992 to present); Chief
Executive and Owner of Oakmont Enterprises, Inc.
(business investment and venture capital firm) (1994
to present); formerly Executive Vice President and
Director (1985 to 1992) and Chief Operating Officer
(1985 to 1990) of Engelhard Corporation (maker of
mineral, chemical and metal performance products).
Director: Atlantic Energy, Inc.; Kerns Oil & Gas,
Inc.
Quentin I. Smith, Jr. Retired; formerly Chairman and Chief Executive Offi- 1990
(69) cer of Towers Perrin (management consulting servic-
es). Director: Omnicom Group Inc.; The Guardian Life
Insurance Company of America.

NOMINEES

- - ------------------------------------------------------------------------------------

UGI
PRINCIPAL OCCUPATION DIRECTOR
NAME AND AGE AND OTHER DIRECTORSHIPS(1) SINCE
- - ------------------------------------------------------------------------------------

Stephen D. Ban President and Chief Executive Officer of Gas Re- 1991
(56) search Institute (gas industry research and develop-
ment) (since 1987); formerly Executive Vice Presi-
dent of Gas Research Institute (1986); formerly Vice
President, Research and Development, Bituminous Ma-
terials, Inc. (1981). Director: Energen Corporation.
Anne Pol Vice President, Thermo Electron Corporation (envi- 1993
(49) ronmental technology products and services) (since
April 1996); formerly President, Pitney Bowes Ship-
ping and Weighing Systems Division, a business unit
of Pitney Bowes Inc. (mailing and related business
equipment) (1993 to 1996); formerly Vice President,
New Product Programs in the Mailing Systems Division
of Pitney Bowes Inc. (1991 to 1993); Vice President,
Manufacturing Operations in the Mailing Systems Di-
vision of Pitney Bowes Inc. (1990 to 1991).
Lon R. Greenberg Chairman of the Board of Directors (since August 1994
(46) 1996); Chief Executive Officer (since August 1995)
and President of the Company (since 1994); formerly
Vice Chairman of the Board (1995 to 1996), Senior
Vice President--Legal and Corporate Development
(1989 to 1994). Director: AmeriGas Propane, Inc.;
Mellon PSFS Advisory Board.

(1) All of the nominees also serve as directors of UGI Utilities, Inc., a
wholly owned subsidiary of the Company.

BOARD COMMITTEES AND MEETING ATTENDANCE

The Board of Directors has six standing committees: the Audit Committee, the
Compensation and Management Development Committee, the Executive/Nominating
Committee, the Pension Committee, the Planning and Finance Committee, and the
Public Affairs Committee. Membership of each Committee as of the record date
of December 13, 1996, is shown in the following table:

COMMITTEES OF THE BOARD AND COMMITTEE MEMBERSHIP

- - ---------------------------------------------------------------------------------------------------

COMPENSATION
AND
MANAGEMENT EXECUTIVE/ PLANNING AND
AUDIT DEVELOPMENT NOMINATING PENSION FINANCE PUBLIC AFFAIRS
- - ---------------------------------------------------------------------------------------------------

R. C. Gozon, R. C. Forney, J. W. Stratton, Q. I. Smith, Jr., D. I. J. Wang, C. H. Holley,
Chairman Chairman Chairman Chairman Chairman Chairman
S. D. Ban R. C. Gozon R. C. Forney R. C. Forney L. R. Greenberg S. D. Ban
C. H. Holley Q. I. Smith, Jr. L. R. Greenberg R. C. Gozon C. H. Holley A. Pol
A. Pol D. I. J. Wang D. I. J. Wang -- J. W. Stratton Q. I. Smith, Jr.

Set forth below is a description of the duties of each of the Committees:

The Audit Committee examines the activities of the Company's independent
auditors and internal audit department to determine whether these activities
are reasonably designed to assure the soundness of accounting and financial
procedures. The Committee reviews the Company's accounting policies and the
objectivity of its financial reporting. The Committee annually considers the
qualifications of the Company's independent auditors and the scope of their
audit and makes recommendations to the Board as to their selection. The
Committee receives reports from the internal auditors and reviews the scope of
the internal audit program. During fiscal year 1996, the Committee met twice.

The Compensation and Management Development Committee establishes executive
compensation policy and approves and recommends to the Board compensation
plans for executive officers of the Company and the salaries to be paid to
certain of those officers. The Committee also reviews the Company's management
development and succession planning policies. The Committee approves the
awards and payments to be made to employees of the Company and its
subsidiaries under its long-term compensation plans. It also makes
recommendations to the Board of Directors concerning outside director
compensation. During fiscal year 1996, the Committee met three times.

The Executive/Nominating Committee has the full power of the Board between
meetings of the Board, with specified limitations relating to major corporate
matters. The Committee also reviews the qualifications of persons eligible to
stand for election as directors and makes recommendations to the Board on this
matter. The Committee considers as nominees qualified persons recommended by
directors, management and shareholders. Written recommendations should be
delivered to the Corporate Secretary, UGI Corporation, P.O. Box 858, Valley
Forge, Pennsylvania 19482. The Company's bylaws do not permit shareholders to
nominate candidates from the floor at the annual meeting without 45 days'
prior notification to the Corporate Secretary. Any such notification would
have to include certain information detailed in the Company's bylaws.
Shareholders who wish to nominate a candidate from the floor at an annual
meeting should contact the Corporate Secretary. During fiscal year 1996, the
Committee met once.

The Pension Committee reviews pension and certain other employee benefit
plans for the Company and its subsidiaries. During fiscal year 1996, the
Committee met twice.

The Planning and Finance Committee reviews the overall business and
financial planning of the Company and its capital expenditures and operating
budgets. The Committee met once in fiscal year 1996.

The Public Affairs Committee monitors significant public issues affecting
the Company and reviews the Company's charitable contributions, community
affairs programs and its policies and practices which are responsive to
governmental and regulatory requirements. The Committee met once during fiscal
year 1996.

Actions taken by any of the foregoing committees are reported to the Board
at its next regular meeting.

Board Meetings. Ten meetings of the Company's Board of Directors were held
during the 1996 fiscal year. All of the directors attended at least 75% of the
aggregate of all meetings of the Board of Directors and Committees of the
Board on which they served.

REPORT OF THE COMPENSATION AND MANAGEMENT
DEVELOPMENT COMMITTEE OF THE BOARD OF DIRECTORS

Executive Compensation Program. One of the roles of the Committee is to
establish and oversee the Company's executive compensation policies and
programs and to recommend to the Board of Directors compensation for executive
officers of the Company and the salaries to be paid to certain of those
officers. In carrying out this role, we believe it is important to align
executive compensation with Company values and objectives, business
strategies, management initiatives, business financial performance and
enhanced shareholder value.

Our Committee is comprised of independent outside directors, none of whom is
or was an officer or employee of the Company or its subsidiaries. Periodically
we solicit and receive recommendations and advice from independent third party
compensation consultants. Towers Perrin has acted in this capacity since 1986.
Compensation for chief executive officers of subsidiary companies is
determined by the respective subsidiary Board of Directors under the same
process described herein.

Our executive compensation program is designed to attract and retain key
executives with outstanding abilities and to motivate them to perform to the
full extent of those abilities. We believe that executives should have a
greater portion of their compensation at risk than other employees, and that
executive compensation should be tied directly to the performance of the
business and be aligned with benefits realized by the Company's shareholders.

Compensation for Company executives consists of both cash and equity based
opportunities. The annual cash compensation consists of (i) base salary and
(ii) annual bonus opportunity under the Company's Annual Bonus Plan. Equity
based opportunities are provided on a long-term basis under the Company's 1992
Stock Option and Dividend Equivalent Plan (through 1996), and, subject to
approval by shareholders, a new 1997 Stock Option and Dividend Equivalent
Plan.

The Committee determines base salary ranges for executive officers based
upon competitive pay practices in the businesses and industries in which the
Company and its subsidiaries compete. The base salary ranges for all executive
officers were set at the 50th percentile of the survey companies. For 1996, as
has been the practice in the past, the Committee reviewed a comparison of base
salary ranges for executive officers with published survey results in Towers
Perrin's Executive Compensation Survey of 507 national non-utility, non-
financial companies, the American Gas Association's Executive Compensation
Survey of 93 utility companies, and Edison Electric Institute's Executive
Compensation Survey of 98 utility companies. This comparison was weighted to
reflect the Company's approximate business mix of general industry and
utility.

Annually, the Committee recommends to the Board of Directors changes in
actual salaries based on judgments of past performance, expanded job duties,
scope and responsibilities (if any), and expected future contributions of each
executive officer. The most recent past performance is the prime determinant.

The Committee also oversees the Company's Annual Bonus Plan for executive
officers. We establish challenging annual objectives based on business
prospects. For Mr. Greenberg, Mr. Ladner and Mr. Westerman, the sole objective
is achieving financial performance for the Company. Mr. Bunn is covered under
the UGI Utilities, Inc. Annual Bonus Plan, and prior to his retirement, Mr.
Mauch was covered under the AmeriGas Partners, L.P. Annual Bonus Plan. For
each, the sole objective is achieving the financial performance goal for his
respective company. For Mr. Cuzzolina, the bonus opportunity is based on
achieving both the current financial performance objective and individual
strategic and operating objectives related to longer term earnings, with
greater weight (75%) given to the current financial performance objective.

Following the end of each fiscal year, after completion of the audit of the
Company's financial statements, the Committee reviews business results and
individual performance of each executive officer and determines and recommends
to the Board of Directors cash bonus payments under the terms of the Annual
Bonus Plan. The financial objective for 1996 for UGI Corporation executives
was based on the weighted achievement of financial performance goals by each
of UGI Utilities, Inc. and AmeriGas Partners, L.P. ("AmeriGas Partners").
Weighting is based on the Company's business mix. For executives whose sole
objective is achieving a financial performance goal, bonus payments are
subject to a maximum 15% adjustment of the target bonus based on the
individual's contribution having a significant impact on corporate
performance. In addition, for all participants, the financial performance
factor is subject to a maximum 10% adjustment based on the positive or
negative contribution from UGI Corporation (other than utility and propane
business performance) on overall Company financial performance. During fiscal
year 1996, the financial objective for UGI Utilities, Inc. was earnings
applicable to common stock. For AmeriGas Partners, the financial objective was
profitability based on cash flow derived from the business, adjusted for real
volume growth, net customer gains or losses, and return on assets. 1996 bonus
awards reflect the financial performance of UGI Utilities, Inc., which
exceeded its goal, and the overall Company performance. The awards also
reflect the fact that AmeriGas Partners did not achieve its financial
performance goal.

Periodically the Committee reviews the overall competitiveness of the Annual
Bonus Plan with its compensation consultant. For 1996 using the published
survey sources and methodology previously identified, the Annual Bonus Plan
target bonus opportunity for each executive remained at the 75th percentile of
the survey companies. The 75th percentile level was determined to be
appropriate in light of the Committee's view that the annual bonus
opportunities should have a high reward potential to recognize the difficulty
of achieving the annual goals, and the significant positive corporate impact
of doing so.

The Company's long-term equity based 1992 Stock Option and Dividend
Equivalent Plan (the "1992 SODEP"), which was approved by the Company's
shareholders in May of 1992, will end this year. In its place, a new 1997
Stock Option and Dividend Equivalent Plan (the "1997 SODEP") has been approved
by this Committee and the Board of Directors and is being submitted for
approval by shareholders at the 1997 Annual Meeting. The Committee oversees
these Plans for executives. The 1992 SODEP consists of non-qualified stock
option grants, with an opportunity to earn during a five-year performance
period an amount equivalent to or greater than the dividends paid on the
shares covered by options. Payment of dividend equivalents is subject to a
comparison of the total return realizable on a share of the Company's Common
Stock with the total return achieved by each member of a group of comparable
peer companies over the 1992 SODEP's five-year performance period. (A list of
the comparable peer companies appears under the heading "Corporate
Performance" following this report.) No payment of dividend equivalents will
be made when the current five-year performance period ends on December 31,
1996.

The 1997 Stock Option and Dividend Equivalent Plan being recommended is
similar to the 1992 SODEP. Payment of dividend equivalents will be based on
the Company's total shareholder return relative to a new group of peer
companies over a three-year performance period rather than a five-year
performance period. The peer group for the 1997 SODEP will be the S&P Utility
Index, modified by eliminating all telecommunication companies. The new peer
group consists of thirty-nine companies, which is a larger group than the
previous peer group. A summary of the proposed 1997 SODEP is included in this
Proxy Statement.

The Committee believes that a shareholder's investment in the Company and
the long-term return on the investment can be judged on a relative basis
against comparable investment opportunities and that it is, in turn,
appropriate to relate this judgment to an executive's long-term compensation.
The Committee believes that grants made under these Plans will focus
executives on increasing shareholder value. Stock option awards were
determined utilizing Towers Perrin's Long-Term

Incentive Plan Survey comprised of 270 national companies and competitive
award levels recommended to the Committee by Towers Perrin. The awards were
valued by the Black-Scholes model.

Fiscal Year 1996 CEO Compensation. The compensation for Mr. Greenberg
recommended to the Board of Directors by the Committee was based upon a number
of factors and criteria. These include the procedure for determining base
salary ranges and actual salaries within ranges described earlier in this
report, as well as a review and evaluation of the Company's financial
performance.

Base Salary. The Committee set Mr. Greenberg's base salary at the same level
set for fiscal year 1995. The Committee's determination was based on the
Company's overall performance in 1995 and on Mr. Greenberg's relatively short
tenure in his position. Mr. Greenberg is not separately compensated for his
responsibilities as interim Chief Executive Officer of AmeriGas Propane, Inc.

Annual Bonus. Mr. Greenberg's annual bonus award was based on achievement of
one of the predetermined financial goals and recognition by the Committee of
the contribution to overall corporate performance made by UGI Enterprises,
Inc., one of the Company's newest subsidiaries and the significant reduction
in corporate overhead achieved during the year. The portion of Mr. Greenberg's
bonus target attributable to AmeriGas Partners' performance was not paid.

Long-Term Incentive. No awards were made to Mr. Greenberg during fiscal year
1996 under the 1992 SODEP. Previously, Mr. Greenberg was awarded 143,959 non-
qualified stock options (each with a corresponding dividend equivalent), under
the 1992 SODEP. Mr. Greenberg is currently vested in 105,278 of these options.
All grants made under the 1992 SODEP are based on competitive award levels.
The purchase price of each option is $20.125, which was the fair market value
of a share of the Company's Common Stock at the beginning of the 1992 SODEP's
five-year performance period. As previously stated, no payout of dividend
equivalents will be made when the 1992 SODEP's five-year performance period
ends on December 31, 1996.

Policy on Deductibility of Compensation. Section 162(m) of the Internal
Revenue Code limits the tax deduction to $1,000,000 for compensation paid to
the Chief Executive Officer and other Named Executive Officers unless certain
requirements are met. One of the requirements is that compensation over
$1,000,000 must be based upon attainment of performance goals approved by
shareholders. Most awards under the 1992 Stock Option and Dividend Equivalent
Plan are not subject to the deductibility cap. At this time, the Committee is
not recommending that any of the Company's existing executive compensation
plans be amended to meet the requirements of Section 162(m) for exclusion from
the deductibility cap, given the relatively small amounts, if any, that might
exceed the cap. The 1997 Stock Option and Dividend Equivalent Plan has been
designed to meet the requirements of Section 162(m) with respect to stock
option and dividend equivalent awards, and is being submitted to the Company's
shareholders for approval.

Compensation and Management Development Committee

Robert C. Forney, Chairman
Richard C. Gozon
Quentin I. Smith, Jr.
David I.J. Wang

CORPORATE PERFORMANCE

The line graph shown below illustrates a five-year comparison of the
cumulative total shareholder return on the Common Stock of the Company with
the cumulative total return on the S&P 500 Index and a peer index of natural
gas distributors (the "1992 SODEP Peer Index"*) during the five years ended
September 30, 1996. The annualized returns reflected in the graph for the
Company, the S&P 500 Index and the SODEP Peer Index were 9.90%, 15.23% and
11.66%, respectively.

----------------------------------------------------------
Comparison of Five-Year Cumulative Total Shareholder
Return Among UGI Corporation, 1992 SODEP Peer Index
and S&P 500 Index
----------------------------------------------------------

[BAR GRAPH APPEARS HERE]

1991 1992 1993 1994 1995 1996
------------------------------------------------------------------

Assumes that the value of the investment in UGI
Common Stock and each index was $100 on
September 30, 1991 and that all dividends were
reinvested.
- - --------
* The 1992 SODEP Peer Index includes AGL Resources, Inc., Atmos Energy
Corporation, Bay State Gas Company, The Brooklyn Union Gas Company, Cascade
Natural Gas Corporation, Colonial Gas Company, Connecticut Energy
Corporation, Connecticut Natural Gas Corporation, Energen Corporation,
Indiana Energy, Inc., Laclede Gas Company, National Fuel Gas Company, New
Jersey Resources Corporation, Northwest Natural Gas Company, Peoples Energy
Corporation, Piedmont Natural Gas Company, Inc., Public Service Company of
North Carolina, Inc., Providence Energy Corporation, South Jersey
Industries, Inc., United Cities Gas Company, Washington Energy Company and
Washington Gas Light Company.

The line graph shown below includes five-year cumulative total shareholder
return data for the utility companies in the new peer group for the 1997
SODEP**. The annualized returns reflected in the graph for the Company, the
S&P 500 Index, the 1992 SODEP Peer Index and the 1997 SODEP Peer Index were
9.90%, 15.23%, 11.66% and 8.92%, respectively.

----------------------------------------------------------
Comparison of Five-Year Cumulative Total Shareholder
Return Among UGI Corporation, 1992 SODEP Peer Index
S&P 500 and 1997 SODEP Peer Index
----------------------------------------------------------

[BAR GRAPH APPEARS HERE]

1991 1992 1993 1994 1995 1996
------------------------------------------------------------------

UGI 100.00 111.47 136.85 112.18 132.04 160.33
------------------------------------------------------------------
1992 SODEP Peer Index 100.00 120.15 147.39 130.03 144.07 173.54
------------------------------------------------------------------
S&P 500 100.00 111.05 125.49 130.12 168.81 203.13
------------------------------------------------------------------
1997 SODEP Peer Index 100.00 113.78 139.31 112.77 141.86 153.33

Assumes that the value of the investment in UGI Common
Stock and each index was $100 on September 30, 1991 and
that all dividends were reinvested.

The cumulative total shareholder return illustrated above is calculated in
accordance with applicable regulations of the SEC. The calculation of "total
return" provided for in the proposed 1997 Stock Option and Dividend Equivalent
Plan is somewhat different. See "Item 3--Approval of Proposed UGI Corporation
1997 Stock Option and Dividend Equivalent Plan."
- - --------
** The new 1997 SODEP Peer Index includes American Electric Power Company,
Inc., Baltimore Gas & Electric Company, Carolina Power & Light Company,
Central & South West Corporation, Cinergy Corporation, Coastal Corporation,
Columbia Gas System, Inc., Consolidated Edison Co. of N.Y., Inc.,
Consolidated Natural Gas Company, Dominion Resources, Inc., DTE Energy
Company, Duke Power Company, Eastern Enterprises, Edison International,
Enron Corporation, Entergy Corporation, FPL Group, Inc., GPU, Inc., Houston
Industries, Inc., Niagara Mohawk Power Corporation, NICOR, Inc., Noram
Energy Corporation, Northern States Power Company, Ohio Edison Company,
ONEOK, Inc., Pacific Enterprises, Pacific Gas & Electric Company,
Pacificorp, PanEnergy Corp., PECO Energy Company, Peoples Energy
Corporation, PP&L Resources, Inc., Public Service Enterprise Group, Inc.,
Sonat, Inc., Southern Company, Texas Utilities Company, Unicom Corporation,
Union Electric Company and The Williams Companies, Inc.

COMPENSATION OF DIRECTORS

The following table shows information concerning director compensation for
fiscal year 1996:

DIRECTORS' COMPENSATION(1)(2)

CASH COMPONENT EQUITY COMPONENT
----------------------------------------------------------------------

Annual Retainer $18,500 72 shares(3)
Annual Option Grant -- 1,000 options(4)
Annual Retainer for Committee Chair $ 2,500 --
Annual Retainer for Executive/
Nominating Committee member $ 1,500 --
Board Attendance Fee (per meeting) $ 850 --
Committee Attendance Fee
(per meeting) $ 700 --

(1) No director who is an officer or employee of the Company
or its subsidiaries is compensated for service on the
Board or on any Committee. Directors may elect to defer,
until the later of termination of services as a director
or attainment of the age of 70, the receipt of all or a
part of retainers and fees payable to them for services as
a director. No director has elected this deferral option.
(2) In addition, each director accrued benefits under the
Retirement Plan for Outside Directors described below.
(3) $1,500 of the Annual Retainer of $20,000 was paid in
shares of the Company's Common Stock pursuant to the 1992
Directors' Stock Plan described below. The fractional
portion of a share was paid in cash. On February 8, 1996,
directors received shares having a fair market value of
$20.75 per share.
(4) Options were granted on February 27, 1996 pursuant to the
1992 Directors' Stock Plan described below. Each option
has an exercise price of $22.25.

During 1996, the Company engaged the services of Towers Perrin, its
compensation consultant, to conduct a review of the Company's compensation
program for outside directors. Following its review, Towers Perrin made
recommendations to management and the Compensation and Management Development
Committee of the Board. After evaluating these recommendations, the Committee
and the Board of Directors approved a new program, which includes the proposed
UGI Corporation Directors' Equity Compensation Plan (the "Directors' 1997
Plan"). If approved by the shareholders, the Directors' 1997 Plan will take
the place of the UGI Corporation 1992 Directors' Stock Plan (the "Directors'
1992 Plan") and the UGI Corporation Retirement Plan for Outside Directors. The
full text of the Directors' 1997 Plan is included as Annex A to this Proxy
Statement. The plan is summarized under the caption "Directors' 1997 Plan
Summary."

UGI Corporation 1992 Directors' Stock Plan. Under the Directors' 1992 Plan,
each non-employee director was entitled to receive an option to purchase 1,000
shares of the Company's Common Stock each year during the period 1992 through
1996 upon annual election to the Board of Directors. In addition, that portion
of the annual retainer payable to a non-employee director prior to January 1,
1997 in excess of $18,500, was paid in shares of the Company's Common Stock in
lieu of cash.

Retirement Plan for Outside Directors. The Company has a Retirement Plan for
Outside Directors (the "Directors' Retirement Plan") which provides for
payment of retirement benefits to members of the Board of Directors who are
neither employed by, nor entitled to pension benefits from, the Company or its
affiliates as a result of any employment period and who have satisfied
applicable age and service criteria or have become disabled. Benefits are
payable under the Directors' Retirement Plan in the event of a change in
control of the Company. The annual benefit payable under the Directors'
Retirement Plan to any particular director is equal to the annual Board
retainer on the date of that director's retirement, exclusive of retainers for
service on Committees. In general, benefits under the Directors' Retirement
Plan continue during the former director's lifetime until the number of
quarterly payments made equals the number of calendar quarters of service as a
director. The Directors' Retirement Plan provides a lump sum payment option
and a spousal benefit option. Subject to shareholder approval of the
Directors' 1997 Plan, the Company will terminate the Retirement Plan for
Outside Directors effective December 31, 1996.

If the Directors' Equity Compensation Plan is approved by the shareholders,
amounts accrued under the Retirement Plan for Outside Directors through
December 31, 1996 will be converted into deferred stock units under the
Directors' 1997 Plan.

COMPENSATION OF EXECUTIVE OFFICERS

Summary of Compensation. The following table shows information concerning
the annual and long-term compensation earned during the last three fiscal
years by the Company's Chief Executive Officer ("CEO"), and each of the five
other most highly compensated executive officers, including Mr. Mauch who
retired effective September 1, 1996 (collectively referred to as the "Named
Executives").

SUMMARY COMPENSATION TABLE
- - ----------------------------------------------------------------------------------------------

LONG-TERM
COMPENSATION
----------------
ANNUAL COMPENSATION AWARDS PAYOUTS
- - ----------------------------------------------------------------------------------------------
SECURITIES
OTHER UNDER-
ANNUAL LYING
COMPEN- OPTIONS/ LTIP ALL OTHER
SALARY BONUS SATION SARS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($)(1) ($)(2) (#)(3) ($) ($)(4)(5)
- - ----------------------------------------------------------------------------------------------

Lon R. Greenberg 1996 $465,000 $122,760 $ 7,359 0 $ 0 $ 10,462
Chairman, President and 1995 $381,923 $ 0 $ 7,365 14,167 $ 0 $ 11,439
Chief Executive Officer, 1994 $255,402 $126,463 $ 1,281 42,292 $ 0 $ 2,891
UGI Corporation
- - ----------------------------------------------------------------------------------------------

Richard L. Bunn 1996 $305,900 $137,655 $ 5,855 0 $ 0 $ 10,579
President and Chief 1995 $305,900 $164,268 $ 6,684 0 $ 0 $ 9,732
Executive Officer, 1994 $305,900 $126,643 $ 3,906 0 $ 0 $ 3,441
UGI Utilities, Inc.
- - ----------------------------------------------------------------------------------------------

Robert C. Mauch 1996 $346,481 $163,350 $62,133 0 $ 0 $876,131
President and Chief 1995 $323,462 $ 32,076 $ 8,707 0 $ 0 $ 56,203
Executive Officer, 1994 $307,992 $191,608 $ 2,426 0 $ 0 $ 23,780
AmeriGas Propane,
Inc.
- - ----------------------------------------------------------------------------------------------

George W. Westerman 1996 $250,000 $ 65,250 $ 7,789 0 $ 0 $ 6,498
Senior Vice President-- 1995 $250,000 $ 38,813 $ 7,144 0 $ 0 $ 8,313
Administration, 1994 $242,546 $119,467 $ 1,143 0 $ 0 $ 2,679
UGI Corporation
- - ----------------------------------------------------------------------------------------------

Charles L. Ladner 1996 $245,000 $ 52,920 $ 8,881 0 $ 0 $ 6,480
Senior Vice 1995 $245,000 $ 42,998 $ 8,851 0 $ 0 $ 8,219
President--Finance, 1994 $237,860 $120,311 $ 2,064 0 $ 0 $ 2,627
UGI Corporation
- - ----------------------------------------------------------------------------------------------

Michael J. Cuzzolina 1996 $168,000 $ 28,843 $ 7,955 0 $ 0 $ 4,336
Vice President-- 1995 $168,000 $ 24,696 $ 8,090 0 $ 0 $ 5,223
Accounting and 1994 $162,988 $ 64,120 $ 1,491 0 $ 0 $ 1,800
Financial Control
UGI Corporation

(1) Bonuses earned under the Annual Bonus Plan are for the year reported,
regardless of the year paid. The Company's Annual Bonus Plan is based on
the achievement of pre-determined business and/or financial performance
objectives which support business plans and goals. Bonus opportunities
vary by position and for fiscal year 1996 ranged from 0% to 117% of base
salary for Mr. Greenberg, 0% to 50% for Mr. Bunn, from 0% to 96% for
Messrs. Westerman and Ladner, and from 0% to 65% for Mr. Cuzzolina.
(2) Amounts represent tax payment reimbursements for certain benefits, except
for Mr. Mauch, in 1996. In addition to a tax payment reimbursement of
$9,561, in 1996 Mr. Mauch received other perquisites available to
executive officers generally, and $38,631 for certain accrued vacation and
personal days.

(3) Non-qualified stock options granted under the 1992 SODEP. The 1992 SODEP
consists of non-qualified stock option grants and the opportunity for
participants to earn an amount equivalent to the dividends paid on shares
covered by options, subject to a comparison of the total return realizable
on a share of the Company's Common Stock (the "Company's Return") with the
total return achieved by each member of a group of comparable peer
companies (the "SODEP Peer Group") over a five-year period beginning
January 1, 1992 and ending December 31, 1996. Total return encompasses
both changes in the per share market price and dividends paid on a share
of Common Stock. No credited dividend equivalents will be paid when the
performance period ends on December 31, 1996.
(4) Amounts represent Company contributions in accordance with the provisions
of the UGI Utilities, Inc. and AmeriGas Propane, Inc. Employee Savings
Plans, as applicable, and/or allocations under the Executive Retirement
Plan. Effective January 1, 1994, the Employee Savings Plans and the
Executive Retirement Plan adopted a plan year ending September 30 to
correspond to the Company's fiscal year. As a result, Company matching
contributions and allocations for 1994 are based on a nine-month plan
year. During 1996, 1995, and 1994, the following contributions were made
to the Named Executives: (i) under the Employee Savings Plans: For each of
Messrs. Greenberg, Bunn, Westerman, Ladner and Cuzzolina, $3,375, $3,375,
and $1,688; Mr. Mauch, $0, $2,250, and $1,688; and (ii) under the
Executive Retirement Plan: Mr. Greenberg, $7,087, $8,064, and $1,203; Mr.
Mauch, $0, $41,983, and $13,114; Mr. Bunn, $7,204, $6,357, and $1,753; Mr.
Westerman, $3,123, $4,938, and $991; Mr. Ladner, $3,105, $4,844, and $939;
Mr. Cuzzolina, $961, $1,848, and $112. In addition, the following
contributions were made to Mr. Mauch as a participant in the AmeriGas
Propane, Inc. Retirement Income Plan for 1996, 1995, and 1994: $11,865,
$11,970, and $8,978.
(5) Mr. Mauch retired as President and Chief Executive Officer, AmeriGas
Propane, Inc. effective September 1, 1996. In addition to the benefits
detailed in footnote (4) above, the 1996 amount shown for Mr. Mauch
includes payments under an agreement which recognized Mr. Mauch's
substantial contributions to AmeriGas Propane, Inc. The agreement provided
for payments of earned and accrued vacation and personal holidays,
including the amount of $57,772 which is included in this column, and a
supplemental payment of $806,494.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

The following table shows fiscal year 1996 information concerning exercised
and unexercised stock options for each of the Named Executives.

OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES

- - -----------------------------------------------------------------------------------------------------

NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES FISCAL YEAR END (#)(1) FISCAL YEAR END ($)(2)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE (#) REALIZED ($)
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - -----------------------------------------------------------------------------------------------------

Lon R. Greenberg 0 $ 0 105,278 38,681 $355,313 $130,548
Robert C. Mauch 0 $ 0 70,000 17,500 $236,250 $ 59,063
Richard L. Bunn 0 $ 0 70,000 17,500 $236,250 $ 59,063
George W. Westerman 0 $ 0 70,000 17,500 $236,250 $ 59,063
Charles L. Ladner 0 $ 0 70,000 17,500 $236,250 $ 59,063
Michael J. Cuzzolina 0 $ 0 24,000 6,000 $ 81,000 $ 20,250

(1) Options granted under the 1992 SODEP.
(2) Value based on comparison of price per share at September 30, 1996 (fair
market value $23.50) to 1992 SODEP option price ($20.125).

RETIREMENT BENEFITS

The following pension plan table shows the annual benefits upon retirement
at age 65 in 1996, without regard to statutory maximums, for various
combinations of final average earnings and lengths of service which may be
payable to the Named Executives under the Company's Qualified Retirement Plan
(the "Retirement Plan") and its Non-Qualified Executive Retirement Plan.

PENSION PLAN BENEFITS TABLE

- - ---------------------------------------------------------------------------

ANNUAL BENEFIT FOR YEARS OF CREDITED SERVICE SHOWN(2)
-------------------------------------------------------------
FINAL 5-YEAR
AVERAGE ANNUAL
EARNINGS(1) 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS 40 YEARS
- - ---------------------------------------------------------------------------

$100,000 $ 28,500 $ 38,000 $ 47,500 $ 57,000 $ 66,500 $ 68,400(3)
$200,000 $ 57,000 $ 76,000 $ 95,000 $114,000 $133,000 $136,800(3)
$300,000 $ 85,500 $114,000 $142,500 $171,000 $199,500 $205,200(3)
$400,000 $114,000 $152,000 $190,000 $228,000 $266,000 $273,600(3)
$500,000 $142,500 $190,000 $237,500 $285,000 $332,500 $342,000(3)
$600,000 $171,000 $228,000 $285,000 $342,000 $399,000 $410,400(3)
$700,000 $199,500 $266,000 $332,500 $399,000 $465,500 $478,800(3)
$800,000 $228,000 $304,000 $380,000 $456,000 $532,000 $547,200(3)
$900,000 $256,500 $342,000 $427,500 $513,000 $598,500 $615,600(3)
$1,000,000 $285,000 $380,000 $475,000 $570,000 $665,000 $684,000(3)

(1) Consists of (i) base salary, commissions and cash payments under the
Annual Bonus Plan, and (ii) deferrals thereof permitted under the Internal
Revenue Code.
(2) Annual benefits are computed on the basis of straight life annuity
amounts. These amounts include pension benefits, if any, to which a
participant may be entitled as a result of participation in a pension plan
of a subsidiary during previous periods of employment. The amounts shown
do not take into account exclusion of up to 35% of the estimated primary
Social Security benefit. The Retirement Plan provides a minimum benefit
equal to 25% of a participant's final 12 months' earnings, reduced
proportionately for less than 15 years of credited service at retirement.
The minimum Retirement Plan benefit is not subject to Social Security
offset.
(3) The Retirement Plan formula maximum benefit equal to 60% of a
participant's highest consecutive 12 months' earnings during the last 120
months.

Messrs. Greenberg, Bunn, Westerman, Ladner and Cuzzolina had, respectively,
16 years, 38 years, 28 years, 23 years and 22 years of estimated credited
service under these Plans at September 30, 1996. Mr. Mauch participated in the
Company's Retirement Plan through December 31, 1992 and had 15 years of
estimated credited service as of that date. On January 1, 1993, Mr. Mauch
began participating in the AmeriGas Propane, Inc. Pension Plan.

Agreement with Robert C. Mauch. At the time of Mr. Mauch's retirement,
AmeriGas Propane entered into an agreement which recognized his substantial
contributions to AmeriGas Propane. As set forth in the Summary Compensation
Table, in addition to his retirement benefits, the agreement provided for
payment of his earned and accrued vacation and personal holidays, a pro-rated
1996 annual bonus, a supplemental payment of $806,494, continuation of
medical, dental, long-term disability and certain other insurance benefits
through September 30, 1997, and certain professional services not to exceed
$75,000 in value.

Severance Pay Plan for Senior Executive Employees. The Severance Pay Plan
for Senior Executive Employees (the "Severance Plan") assists certain senior
level employees in the event their employment is terminated without fault on
their part. Specified benefits are payable to a senior executive covered

by the Severance Plan if the senior executive's employment is involuntarily
terminated for any reason other than for cause or as a result of the senior
executive's death or disability.

Benefits payable include a lump sum cash payment in an amount approximately
equal to the sum of (i) three months of compensation (18 months in the case of
Mr. Greenberg), (ii) a pro rata portion of the senior executive's annual
target bonus under the Annual Bonus Plan for the current year, and
(iii) separation pay and pay in lieu of vacation and holidays determined in a
manner consistent with that payable to employees generally. Employee benefits
are continued for a specified period (the "Employee Benefit Period") not
exceeding 15 months (30 months in the case of Mr. Greenberg) after
termination, or the senior executive may be paid a lump sum equal to the
present value of such benefits. The Severance Plan also provides for payment
in cash to a senior executive of an amount approximately equal to all dividend
equivalents credited (including those that would be credited during the
Employee Benefit Period) to the senior executive's account under the 1992
Stock Option and Dividend Equivalent Plan or the 1997 SODEP, whichever is in
effect. Senior executives may designate a beneficiary for these payments.

Change of Control Arrangements. On April 30, 1996, the Board of Directors of
the Company approved Change of Control Agreements (individually, an
"Agreement"), for senior executive officers of the Company and certain of its
subsidiaries, including Messrs. Greenberg, Mauch, Bunn, Westerman, Ladner and
Cuzzolina. The Agreements operate independently of the Severance Plan,
continue through June 2001, and are automatically extended in one-year
increments thereafter unless, prior to a change of control, the Company
terminates an Agreement. In the absence of a change of control, each Agreement
will terminate when, for any reason, the executive terminates his employment
with the Company or its subsidiaries.

A change of control is generally deemed to occur if: (i) any person (other
than the executive, his affiliates and associates, the Company or any of its
subsidiaries, any employee benefit plan of the Company or any of its
subsidiaries, or any person or entity organized, appointed, or established by
the Company or its subsidiaries for or pursuant to the terms of any such
employee benefit plan), together with all affiliates and associates of such
person, acquires securities representing 20% or more of either (x) the then
outstanding shares of common stock of the Company or (y) the combined voting
power of the Company's then outstanding voting securities, in either case
unless the members of the Executive Committee of the Board of Directors in
office immediately prior to such acquisition (the "Executive Committee")
determine that the circumstances do not warrant the implementation of the
provisions of the Agreement; (ii) individuals who at the beginning of any 24-
month period constitute the Board of Directors (the "Incumbent Board") and any
new director whose election by the Board of Directors, or nomination for
election by the Company's shareholders, was approved by a vote of at least a
majority of the Incumbent Board, cease for any reason to constitute a majority
thereof; (iii) the Company is reorganized, merged or consolidated with or
into, or sells all or substantially all of its assets to, another corporation
in a transaction in which former shareholders of the Company do not own more
than 50% of the outstanding common stock and the combined voting power,
respectively, of the then outstanding voting securities of the surviving or
acquiring corporation after the transaction, in any such case, unless the
Executive Committee determines at the time of such transaction that the
circumstances do not warrant the implementation of the provisions of the
Agreement; or (iv) the Company is liquidated or dissolved.

Severance benefits are payable under the Agreements if there is a
termination of the executive's employment without cause at any time within
three years after a change of control. In addition, following a change of
control, the executive may elect to terminate his or her employment without
loss of severance benefits in certain specified contingencies, including
termination of officer status; a significant adverse change in authority,
duties, responsibilities or compensation; the failure of the Company to comply
with and satisfy any of the terms of the Agreement; or a substantial
relocation or excessive travel requirements.

An executive who is terminated with rights to severance compensation under
an Agreement will be entitled to receive an amount equal to 1.0 or 1.5 (2.5 in
the case of Mr. Greenberg) times his average total cash remuneration for the
preceding five calendar years. The net amount payable under the Agreement,
taking into account payments due under other plans, as appropriate, may not
exceed 2.99 times the executive's "base amount" (as defined in Section 280G of
the Internal Revenue Code of 1986, as amended (the "Code")) which, generally,
is the average of the executive's taxable annual income received from the
Company and its subsidiaries during the five-year period preceding the change
of control, to avoid the special federal tax rules applicable to "excess
parachute payments."

To protect both parties to the Agreements, if the severance compensation
payable under the Agreement, either alone or together with other payments to
an executive, would constitute "excess parachute payments," as defined in
Section 280G of the Code, such severance compensation payment would be reduced
to the largest amount which would result in no portion of such payments being
disallowed as deductions to the Company under Section 280G of the Code, and no
portion of such payments being subject to the excise tax imposed on the
recipient by Section 4999 of the Code. The determination of such reductions
will be made, in good faith, by the Company's independent accountants and will
be conclusively binding.

- - --------------------------------------------------------------------------------

ITEM 2 -- APPROVAL OF PROPOSED UGI CORPORATION DIRECTORS' EQUITY
COMPENSATION PLAN

- - --------------------------------------------------------------------------------
INTRODUCTION

During 1996, in response to changes in competitive practices and in
anticipation of the expiration of the UGI Corporation 1992 Directors' Stock
Plan in December 1996, the Company engaged the services of Towers Perrin to
conduct a review of its compensation program for outside directors. As a
result of this review, and in keeping with the philosophy of directly aligning
directors' compensation with shareholder interests, Towers Perrin recommended
the adoption of the UGI Corporation Directors' Equity Compensation Plan (the
"Directors' 1997 Plan"), concurrent with the elimination of the Directors'
1992 Plan and the Directors' Retirement Plan. On October 29, 1996, the Board
of Directors approved the Directors' 1997 Plan, to be effective January 1,
1997, subject to shareholder approval. The purpose of the Directors' 1997 Plan
is to provide further ownership of the Company's Common Stock by non-employee
directors, thereby aligning such directors' interests more closely with the
interests of shareholders of the Company. The Directors' 1997 Plan is also
intended to assist the Company in securing and retaining highly qualified
persons to serve as non-employee directors, in which position they may
contribute to the long-term growth and profitability of the Company. Only non-
employee directors will participate in the Plan.

DIRECTORS' 1997 PLAN SUMMARY

The following summary of the Directors' 1997 Plan is qualified in its
entirety by the full text of the plan, which is set forth in Annex A to this
Proxy Statement.

General Description. In consideration of their services, the Directors' 1997
Plan provides for awards to directors of (i) shares of the Company's common
stock ("Shares") and (ii) "Deferred Units" which are neither actual Shares nor
other securities, but which will be accounted for on a basis which directly
correlates the value of each Deferred Unit ("Unit") to the fair market value
of a Share. Units will be converted to whole Shares and paid out to directors
upon their retirement or termination of service.

Directors will receive annual awards of Shares in lieu of cash for that
portion of their annual retainer fee which is in excess of $18,500. The fair
market value of such Shares will be determined as

of the first day of the Plan Year, and the Shares will be issued promptly
after the first meeting of the Board of Directors in each Plan Year. The
amount of the annual retainer fee and the corresponding grant of Shares will
be prorated for any director who commences service during a Plan Year. Any
fractional Shares will be paid in cash. Prior to the beginning of each Plan
Year, participants may elect to defer any portion of their meeting fees and
the cash portion of their annual retainer into Units.

All directors with accrued benefits under the Directors' Retirement Plan
will have credited to their account an initial award of Units on January 1,
1997, equal in value to their accrued retirement benefits. To determine the
number of Units to be credited, the present value of accrued retirement
benefits for each Participant will be divided by the average of the closing
sales prices for the Common Stock as reported on the New York Stock Exchange
Composite Transactions tape for each trading day in the period October 1, 1996
through December 31, 1996. In addition, directors will receive an annual award
of 630 Units each year. This annual award is in lieu of continuing benefits
under the Directors' Retirement Plan and the Directors' 1992 Plan (which
provided annual stock option grants). Both of these plans will terminate on
December 31, 1996. Annual awards will be made after the first meeting of the
Board of Directors in each Plan Year.

Dividend Equivalents. All whole Units credited to a Director will earn
dividend equivalents on each record date for the payment of a dividend by the
Company on its Common Stock. A dividend equivalent is an amount determined by
multiplying the number of Units credited to a participant's account by the
per-share cash dividend, or the per-share fair market value of any non-cash
dividend, paid by the Company on its Shares on a dividend payment date.
Accrued dividend equivalents will be converted to additional whole Units
annually, on the last day of the Plan Year.

Vesting and Payment. All Units and dividend equivalents are fully vested
when credited to the participant's account. Account balances will become due
and payable in Shares upon retirement or termination of service, unless the
participant shall have elected to defer such benefits. Participants have the
ability to defer receipt of benefits due upon retirement or termination of
service until they reach 65 years of age. In addition, participants have the
option to receive their benefits in a lump sum, or in installments over a
period of up to 10 years. Participants who defer payment or elect an
installment payout will continue to be credited with dividend equivalents
during the deferral and installment periods. In the event of a "change of
control," account balances will become due and payable in cash unless the
participant shall have elected to defer such benefits.

Administration. The Plan will be administered by the Compensation and
Management Development Committee. The Board of Directors may amend, suspend or
terminate the Plan at any time, although without the written consent of a
participant, accrued benefits may not be adversely affected.

Federal Income Tax Consequences. The Company believes recipients of Units
will not recognize any income for federal income tax purposes until they
receive payment. The Company will not be entitled to any deduction at the time
the Units are granted or dividend equivalents are credited to the accounts of
the recipients, but upon receipt of benefits by the recipient, the Company
will be entitled to a deduction and the recipient will be subject to ordinary
income taxes on the value of the Shares and cash, if any, received.

The annual award of Shares will produce immediate tax consequences for both
the recipient and the Company. The recipient will be treated as having
received taxable compensation in an amount equal to the then fair market value
of the Shares distributed to him or her. The Company will have a corresponding
deduction of the same amount.

The preceding discussion is only a general summary of certain federal income
tax consequences arising from participation in the Directors' 1997 Plan. Local
and state tax authorities may also tax compensation awarded under this Plan.

1997 ESTIMATED PLAN BENEFITS

The following table reflects the estimated awards of Shares and Units for
the initial Plan Year, not including the one-time award of Units which will be
made to compensate directors for the loss of their accrued retirement benefits
due to the termination of the Directors' Retirement Plan on December 31, 1996.
Those awards are not yet determinable because they will be made based on the
average price for Shares during the fourth calendar quarter of 1996.

DIRECTORS' EQUITY COMPENSATION PLAN
1997 ESTIMATED BENEFITS(1)

- - ---------------------------------------------------------------------

NUMBER OF
SHARES OF DOLLAR
NAME DEFERRED UNITS STOCK(2) VALUE
- - ---------------------------------------------------------------------

James W. Stratton 630 154 $ 17,738
Robert C. Forney 630 154 $ 17,738
David I. J. Wang 630 154 $ 17,738
Richard C. Gozon 630 154 $ 17,738
Cyrus H. Holley 630 154 $ 17,738
Quentin I. Smith, Jr. 630 154 $ 17,738
Stephen D. Ban 630 154 $ 17,738
Anne Pol 630 154 $ 17,738
Outside directors as a Group (8) 5,040 1,232 $141,904

(1) The number of Shares and the Dollar Value shown above reflects a fair
market value of $22.625 per Share, based on the average of the highest and
lowest sales prices reported on the New York Stock Exchange Composite
Transactions tape on December 10, 1996, rounded to the next full one-
eighth of a point.
(2) Based on an Annual Retainer of $22,000, effective January 1, 1997, of
which $3,500 will be paid in the form of Shares. The actual number of
Shares awarded will be based upon the fair market value per Share on
January 1, 1997.

VOTE REQUIRED FOR APPROVAL

The affirmative vote of a majority of the outstanding shares of Common Stock
represented at the meeting is required to approve the Directors' 1997 Plan.

The Board of Directors recommends a vote FOR approval of the UGI Corporation
Directors' Equity Compensation Plan.

- - --------------------------------------------------------------------------------

ITEM 3 -- APPROVAL OF PROPOSED UGI CORPORATION 1997 STOCK OPTION
AND DIVIDEND EQUIVALENT PLAN

- - --------------------------------------------------------------------------------

INTRODUCTION

The Board of Directors of the Company is recommending shareholder approval
of a third Stock Option and Dividend Equivalent Plan to be effective as of
December 10, 1996 (the "1997 SODEP"). The 1997 SODEP succeeds the UGI
Corporation 1992 Stock Option and Dividend Equivalent Plan, which in turn
succeeded the UGI Corporation 1987 Stock Option and Dividend Equivalent Plan.
Each of the two prior plans was successful in achieving its objective of
aligning long-term executive compensation with shareholder return. The Board
of Directors believes that it continues to be appropriate for long-term
executive compensation to be based on growth in shareholder value.

In 1996 the Company engaged the services of its compensation consultant,
Towers Perrin, to examine this approach in light of current competitive long-
term compensation practices. Towers Perrin recommended an approach for the
1997 SODEP that is fundamentally the same as the two prior plans, with some
modifications. Among those modifications is changing the performance period to
three years from the five-year period used in the 1992 SODEP. A three-year
performance period was recommended to reflect both recent competitive
practices as well as the accelerating pace of change in the energy industry. A
second modification relates to the change in peer groups against which
performance is measured. This modification was made to both increase the
number of companies in the peer group and to recognize the expanded base of
comparable companies due to the convergence of energy sources occurring in the
energy industry.

Towers Perrin also recommended award levels for participants in the Plan.
The recommendations of Towers Perrin were presented to the Compensation and
Management Development Committee of the Board of Directors, which is comprised
solely of outside directors. That Committee thoroughly reviewed the 1997 SODEP
and submitted its recommendations to the entire Board of Directors of the
Company. The Board of Directors approved the 1997 SODEP on October 29, 1996.

The philosophy behind the proposed 1997 SODEP is the same as the philosophy
underlying the prior two plans. The 1997 SODEP consists of non-qualified stock
option grants and the opportunity for participants to earn an amount
equivalent to the dividends paid on the shares covered by options ("Dividend
Equivalents"), subject to the Company's achievement of long-term goals. In
general, the performance of the Company will be compared to that of the
companies in the S&P Utility Index, modified by eliminating all
telecommunication companies (as modified, the "1997 Peer Group"), over a
proposed three-year performance period beginning January 1, 1997 and ending
December 31, 1999. Performance criteria for the performance period will be
UGI's total shareholder return performance compared to the performance of the
companies in the 1997 Peer Group. No payment of Dividend Equivalents will be
made at the end of the performance period unless the Company's total
shareholder return is equal to or greater than that of 50% of the companies in
the 1997 Peer Group. A graph showing the Company's performance against the
1997 Peer Group for the five-year period 1991 -- 1996 can be found under the
caption "Corporate Performance" above.

Through the use of this total return technique, the Board of Directors
continues to believe that a shareholder's investment can be judged on a
relative basis against comparable investment opportunities and that it is in
turn appropriate to relate this judgment to key executives' long-term
compensation.

Shareholders receive the benefits of an investment in the Company's Common
Stock through dividends and through appreciation in the price of that stock.
This recommended plan rewards key executives in essentially the same way.
Stock options attain value for the key executives only if the share price
increases. In addition, the key executives are afforded the opportunity to
earn an amount equivalent to or greater than the dividends paid on the shares
covered by the option if they can provide overall shareholder total return
performance which is superior in comparison to the companies in the 1997 Peer
Group. Performance against the 1997 Peer Group is considered significant
because it is believed that the Company's investors would logically seek
alternative investment opportunities among the companies included in the 1997
Peer Group. If performance is not superior within the 1997 Peer Group, the
dividend equivalents will not be earned; if the share price does not
appreciate, the option does not have value. Thus, the shareholders' and senior
management's interests are the same. Indeed, the Board of Directors expects
that Dividend Equivalents, if earned, will be utilized by participants to
exercise options to acquire additional shares of Common Stock. The Board of
Directors believes that the 1997 SODEP continues a focus of attempting to
excel against external competition and directly aligning participant interest
to shareholder interest. Thus, the Board of Directors recommends that you vote
FOR the 1997 Plan.

PLAN SUMMARY

The following summary of the 1997 SODEP is qualified in its entirety by the
full text of the Plan which is set forth in Annex B to this Proxy Statement.

General Description. The 1997 SODEP authorizes granting options to acquire
shares of the Company's Common Stock (the "Common Stock") to designated key
employees of the Company and its subsidiaries (currently, 8 individuals). The
number of shares of Common Stock which may be made the subject of options
under the 1997 SODEP at any one time may not exceed 1,500,000. In addition, no
participant may be granted more than 300,000 options in any calendar year. The
1997 SODEP provides for payment to participants of Dividend Equivalents (as
described below) on option shares, contingent on the achievement of certain
performance goals more particularly described below. No participant may accrue
Dividend Equivalents in excess of $1,000,000 in any calendar year. The 1997
Plan will be in effect until all Common Stock subject to it has been purchased
through the exercise of options or all options have terminated without
exercise.

Administration; Eligibility. The 1997 SODEP is administered by the
Compensation and Management Development Committee (the "Compensation
Committee") of the Company's Board of Directors. The Compensation Committee
has the power to determine which employees of the Company and its subsidiaries
will be granted options under the 1997 SODEP. Full-time salaried employees of
the Company and its subsidiaries are eligible.

Options are granted to employees who, in the opinion of the Compensation
Committee, are in a position to participate significantly in the development
and implementation of the Company's strategic plans and thereby contribute
materially to the continued growth and development of the Company and to its
future financial success.

Subject to the limitations contained in the Plan, the Compensation Committee
has the power to determine the number of option shares granted to an employee
and the other terms and conditions of the options, including their exercise
price and duration (which will not be more than ten years from the date of
grant). In addition, the Compensation Committee determines (i) the composition
of a peer group reasonably comparable to the Company and (ii) measurable
criteria for comparing the total return realizable by a shareholder on a share
of Common Stock with that of the other companies in the Peer Group.

Option Price. The option price for options granted under the 1997 SODEP will
be determined by the Compensation Committee, but may not be less than 100% of
the fair market value of a share of Common Stock on the date of grant.

Vesting, Exercise and Payment. Except as otherwise provided by the
Compensation Committee, all options will be 100% vested on the date of grant.
Subject to shareholder approval of the Plan, each of the options granted on
December 10, 1996 is fully vested and immediately exercisable. Upon exercise,
payment for shares of Common Stock must be made (a) in cash or its equivalent,
(b) by tendering previously acquired shares of Common Stock already owned for
more than one year and having a fair market value at the time of exercise
equal to the option price, (c) by applying Dividend Equivalents payable to the
participant in an amount equal to the option price, or (d) by such other
method as the Compensation Committee may approve.

Terms of Option. The expiration date of options granted under the 1997 SODEP
is determined by the Compensation Committee and will not be later than the
tenth anniversary of the date an option is granted. Except as otherwise
provided by the Compensation Committee, options granted under the 1997 SODEP
are nontransferable, except by will or laws of descent and distribution, and
are exercisable only while the participant is employed by the Company or a
subsidiary. However, when employment is terminated by retirement or a
determination of total disability, or when employment is terminated without
cause, the options remain exercisable for 13 months after cessation of
employment.

Dividend Equivalents. The Company will maintain an account in its records
for each employee granted an option under the 1997 SODEP. From the date the
option is granted (or, in the case of options granted during the applicable
performance period to new participants or to participants with changed
responsibilities, from such date not earlier than the beginning of such
performance period as is designated by the Compensation Committee) until the
end of the applicable performance period associated with Dividend Equivalents
on the option or until the earlier termination of the employee's employment,
the Company will credit the account on the record date for each dividend
payment made by the Company on its Stock with an amount equal to the Dividend
Equivalent associated with that option. The Dividend Equivalent is determined
by multiplying the number of shares of Common Stock subject to the option on
the date it is granted by the per-share cash dividend, or the per-share fair
market value of any non-cash dividend, paid by the Company on its Common
Stock. A participant may receive payment of the credited Dividend Equivalents
at or after the end of the applicable performance period for all options
granted to date, depending upon the percent of comparable companies which have
a total return realizable by shareholders which is less than the total return
on a share of Common Stock. No credited Dividend Equivalents will be earned
unless the total return realizable by shareholders of the Company is equal to
or greater than that of 50% of the companies in the 1997 Peer Group. The
percent of credited Dividend Equivalents payable varies from 75% (if the
Company's return is equal to or greater than that of 50% of companies in the
1997 Peer Group) to 200% (if the Company's return is greater than that of all
of the companies in the 1997 Peer Group).

Dividend Equivalents which are determined to be earned may be paid in
credits to be applied toward payment of the option price, in cash or partly in
such credits and partly in cash in the discretion of the Compensation
Committee. From the date 30 days after the date Dividend Equivalents become
earned until the date they are actually paid, the account maintained in the
Company's records will be credited with interest at a rate determined by the
Compensation Committee. Participants in the 1997 SODEP have the right to defer
receipt of Dividend Equivalent payments on terms and conditions approved by
the Compensation Committee.

Amendments. Subject to Board approval, the Compensation Committee may from
time to time amend, suspend or terminate the 1997 SODEP without the consent of
the Company's shareholders, although without the written consent of a
participant, options and Dividend Equivalents associated with such options may
not be adversely affected. Any such amendment, suspension or termination shall
be subject to the approval of the shareholders if such approval is required by
federal or state law or the rules of any stock exchange on which the Common
Stock is listed, or if the Compensation Committee determines that shareholder
approval is advisable.

Federal Income Tax Consequences. There are no federal income tax
consequences to participants or to the Company upon the grant of a non-
qualified stock option ("NQSO") under the 1997 SODEP. Upon the exercise of a
NQSO, a participant will recognize ordinary compensation income in an amount
equal to the excess of the fair market value of the shares of Common Stock of
the Company at the time of the exercise over the per share exercise price of
the NQSO, and the Company generally will be entitled to a corresponding
federal income tax deduction. Upon the sale of shares of Common Stock acquired
by exercise of a NQSO, a participant will have a capital gain or loss (long-
term or short-term depending upon the length of time the shares of Common
Stock were held) in an amount equal to the difference between the amount
realized upon the sale and the participant's adjusted tax basis in the shares
of Common Stock (the exercise price plus the amount of ordinary income
recognized by the participant at the time of exercise of the NQSO).

A participant who has been credited with Dividend Equivalents will not have
taxable income at the time such credit is recorded, and the Company will not
be entitled to a deduction at such time. A participant will have ordinary
income at the time the Dividend Equivalents are paid, and the

Company will have a corresponding deduction, subject to the application of the
provisions of Section 162(m) of the Internal Revenue Code. See "Report of the
Compensation and Management Development Committee--Policy on Deductibility of
Compensation."

Local and state tax authorities may also tax incentive compensation awarded
under the 1997 SODEP.

Tax Withholding. The Company has the right to require the participant to pay
the Company the amount of any taxes which the Company is required to withhold
in respect of any option or, to the extent authorized by the Compensation
Committee, to withhold or receive Common Stock in satisfaction of a
participant's tax obligations, including tax obligations in excess of
mandatory withholding requirements.

GRANTS MADE SUBJECT TO SHAREHOLDER APPROVAL

Subject to shareholder approval of the 1997 SODEP, options to purchase an
aggregate of 445,000 shares of Common Stock were granted to current executive
officers of the Company as set forth in the table below (6 persons). The
option price for each of these options is $22.625, the fair market value of
the Common Stock on December 10, 1996, the date of grant.

1997 STOCK OPTION AND DIVIDEND EQUIVALENT PLAN
1997 ESTIMATED BENEFITS

-------------------------------------------------------------------------

NUMBER OF
NAME AND POSITION OPTIONS
-------------------------------------------------------------------------

Lon R. Greenberg 200,000
Chairman, President and Chief Executive Officer
Richard L. Bunn 75,000
President and Chief Executive Officer, UGI Utilities, Inc.
Charles L. Ladner 75,000
Senior Vice President--Finance
Bradley C. Hall 35,000
Vice President--New Business Development
Michael J. Cuzzolina 30,000
Vice President--Accounting and Financial Control
Brendan P. Bovaird 30,000
Vice President and General Counsel
Executive Group 445,000

The last reported sale price of UGI's Common Stock on December 10, 1996 as
reported on the New York Stock Exchange Composite Transactions tape was
$22.50.

VOTE REQUIRED FOR APPROVAL

The affirmative vote of a majority of the outstanding shares of Common Stock
represented at the meeting is required to approve the 1997 SODEP.

The Board of Directors recommends a vote FOR approval of the UGI Corporation
1997 Stock Option and Dividend Equivalent Plan.

- - --------------------------------------------------------------------------------
ITEM 4 -- RATIFICATION OF APPOINTMENT
OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
- - --------------------------------------------------------------------------------

Upon the recommendation of the Audit Committee, the Board of Directors has
appointed Coopers & Lybrand L.L.P. as independent certified public accountants
to examine and report on the consolidated financial statements of the Company
for the 1997 fiscal year and recommends that the shareholders approve such
appointment. If the shareholders should not approve such appointment, the
Audit Committee and the Board of Directors will consider the appointment of
other independent certified public accountants. Representatives of Coopers &
Lybrand L.L.P. will be present at the Annual Meeting and will have the
opportunity to respond to appropriate questions and to make a statement if
they wish to do so.

- - --------------------------------------------------------------------------------

ITEM 5 -- OTHER MATTERS

- - --------------------------------------------------------------------------------

The Board of Directors is not aware of any other matters to be presented for
action at the meeting. If any other matter requiring a vote of the
shareholders should arise, it is intended that the persons named in the
enclosed proxy (or their substitutes) will vote in accordance with their best
judgment.

ANNEX A

UGI CORPORATION

DIRECTORS' EQUITY COMPENSATION PLAN

1. PURPOSE

The purpose of the UGI Corporation Directors' Equity Compensation Plan is to
provide a means whereby UGI Corporation (the "Company") may, through the grant
of common stock of the Company ("Common Stock") or deferred units ("Units")
relating to such stock, offer a reward and an incentive to the members of the
board of directors of the Company, motivate such directors to exert their best
efforts on behalf of the Company and further to align the economic interest of
such individuals with those of the Company's shareholders. This Plan is
intended to constitute, in part, a non-qualified deferred compensation plan.

2. DEFINITIONS

Whenever used in this Plan, the following terms will have the respective
meanings set forth below:

2.01 "Account" means the Company's record established pursuant to Section 5
which reflects the number of Units and the amount of Dividend Equivalents
standing to the credit of a Participant under the Plan.

2.02 "Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act.

2.03 "Beneficial Owner" means that a person shall be deemed the "Beneficial
Owner" of any securities: (i) that such person or any of such person's
Affiliates or Associates, directly or indirectly, has the right to acquire
(whether such right is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or understanding (whether or not
in writing) or upon the exercise of conversion rights, exchange rights,
rights, warrants or options, or otherwise; provided, however, that a person
shall not be deemed the "Beneficial Owner" of securities tendered pursuant to
a tender or exchange offer made by such person or any of such person's
Affiliates or Associates until such tendered securities are accepted for
payment, purchase or exchange; (ii) that such person or any of such person's
Affiliates or Associates, directly or indirectly, has the right to vote or
dispose of or has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act), including
without limitation pursuant to any agreement, arrangement or understanding,
whether or not in writing; provided, however, that a person shall not be
deemed the "Beneficial Owner" of any security under this clause (ii) as a
result of an oral or written agreement, arrangement or understanding to vote
such security if such agreement, arrangement or understanding (A) arises
solely from a revocable proxy given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable
provisions of the General Rules and Regulations under the Exchange Act, and
(B) is not then reportable by such person on Schedule 13D under the Exchange
Act (or any comparable or successor report); or (iii) that are beneficially
owned, directly or indirectly, by any other person (or any Affiliate or
Associate thereof) with which such person (or any of such person's Affiliates
or Associates) has any agreement, arrangement or understanding (whether or not
in writing) for the purpose of acquiring, holding, voting (except pursuant to
a revocable proxy as described in the proviso to clause (ii) above) or
disposing of any voting securities of the Company; provided, however, that
nothing in this section shall cause a person engaged in business as an
underwriter of securities to be the "Beneficial Owner" of any securities
acquired through such person's participation in good faith in a firm
commitment underwriting until the expiration of forty days after the date of
such acquisition.

A-1

2.04 "Beneficiary" means the person(s) designated by a Participant to
receive any benefits payable under this Plan subsequent to the Participant's
death. The Committee shall provide a form for this purpose. In the event a
Participant has not filed a Beneficiary designation with the Company, the
Beneficiary shall be the Participant's estate.

2.05 "Board" means the Board of Directors of the Company.

2.06 "Change of Control" of the Company means (i) any person (except the
Director, his Affiliates and Associates, the Company, any subsidiary of the
Company, any employee benefit plan of the Company or of any subsidiary of the
Company, or any person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such employee benefit plan),
together with all Affiliates and Associates of such person, becomes the
Beneficial Owner in the aggregate of 20% or more of either (A) the then
outstanding shares of common stock of the Company (the "Outstanding Company
Common Stock") or (B) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Company Voting Securities"), in either case unless the members
of the Committee in office immediately prior to such acquisition determine
within five business days of the receipt of actual notice of such acquisition
that the circumstances do not warrant the implementation of the Change of
Control provisions of this Plan; or (ii) individuals who, as of the beginning
of any twenty-four month period, constitute the Board (the "Incumbent Board")
cease for any reason to constitute at least a majority of the Board, provided
that any individual becoming a director subsequent to the beginning of such
period whose election or nomination for election by the Company's shareholders
was approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office is in connection with an actual
or threatened election contest relating to the election of the Directors of
the Company (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act); or (iii) consummation by the Company of a
reorganization, merger or consolidation (a "Business Combination"), in each
case, with respect to which all or substantially all of the individuals and
entities who were the respective Beneficial Owners of the Outstanding Company
Common Stock and Company Voting Securities immediately prior to such Business
Combination do not, following such Business Combination, Beneficially Own,
directly or indirectly, more than 50% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business Combination
in substantially the same proportion as their ownership immediately prior to
such Business Combination of the Outstanding Company Common Stock and Company
Voting Securities, as the case may be, in any such case unless the members of
the Committee in office immediately prior to such Business Combination
determine at the time of such Business Combination that the circumstances do
not warrant the implementation of the Change of Control provisions of this
Plan; or (iv) (A) Consummation of a complete liquidation or dissolution of the
Company or (B) sale or other disposition of all or substantially all of the
assets of the Company other than to a corporation with respect to which,
following such sale or disposition, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors is then owned beneficially, directly or indirectly, by all or
substantially all of the individuals and entities who were the Beneficial
Owners, respectively, of the Outstanding Company Common Stock and Company
Voting Securities immediately prior to such sale or disposition in
substantially the same proportion as their ownership of the Outstanding
Company Common Stock and Company Voting Securities, as the case may be,
immediately prior to such sale or disposition, in any such case unless the
members of the Committee in office immediately prior to such sale or
disposition determine at the time of such sale or disposition that the
circumstances do not warrant the implementation of the Change of Control
provisions of this Plan.

A-2

2.07 "Committee" means the Compensation and Management Development Committee
of the Board and any successor thereto.

2.08 "Common Stock" means the common stock of the Company.

2.09 "Company" means UGI Corporation and any successor thereto.

2.10 "Director" means a member of the Board who is not an employee of the
Company or any of its Affiliates.

2.11 "Dividend Equivalent" means an amount determined by multiplying the
number of Units credited to a Participant's Account by the per share cash
dividend, or the per share fair market value (as determined by the Committee)
of any dividend in consideration other than cash, paid by the Company on its
stock on a dividend payment date.

2.12 "Effective Date" means January 1, 1997.

2.13 "Exchange Act" means Securities Exchange Act of 1934, as amended.

2.14 "Fair Market Value" of Common Stock means the average, rounded to the
next highest one-eighth of a point (.125), of the highest and lowest sales
prices thereof on the New York Stock Exchange on the day on which Fair Market
Value is being determined, as reported on the Composite Tape for transactions
on the New York Stock Exchange. In the event that there are no Common Stock
transactions on the New York Stock Exchange on such day, the Fair Market Value
will be determined as of the immediately preceding day on which there were
Common Stock transactions on that exchange.

2.15 "Participant" means any Director who is eligible to participate in the
Plan under Section 4. In the event of the death or incompetency of a
Participant, the term shall mean his personal representative or guardian. An
individual shall remain a Participant until that individual has received full
distribution of any amount credited to the Participant's Account.

2.16 "Plan" means the UGI Corporation Directors' Equity Compensation Plan as
the same is set forth herein, and as it may be amended from time to time.

2.17 "Plan Year" means the calendar year.

2.18 "Separates from Service" means the Director's termination of service as
a member of the Board for any reason other than death. Except as otherwise
provided herein, a Separation from Service shall be deemed to have occurred on
the last day of the month during which the Director's service to the Company
ceases and shall be determined without reference to any compensation
continuation arrangement that may be applicable.

2.19 "Unit" means a single unit granted to a Participant which represents a
phantom interest equivalent to one share of Common Stock.

2.20 "Unit Value" means, at any time, unless otherwise specified in the
Plan, the value of each Unit issued under the Plan, which value shall be equal
to the Fair Market Value of the Common Stock on such date.

3. ADMINISTRATION

The Plan shall be administered by the Committee which shall have full power
and authority to interpret the Plan, to prescribe, amend and rescind any
rules, forms and procedures as it deems necessary or appropriate for the
proper administration of the Plan and to make any other

A-3

determinations, including factual determinations, and take such other actions
as it deems necessary or advisable in carrying out its duties under the Plan.
All decisions and determinations by the Committee shall be final and binding
on the Company, Participants, Directors, Beneficiaries and any other persons
having or claiming an interest hereunder. Any other provisions of the Plan
notwithstanding, the Board may perform any function of the Committee under the
Plan, including without limitation for the purpose of ensuring that
transactions under the Plan by Participants who are subject to Section 16 of
the Exchange Act in respect of the Company are exempt under Rule 16b-3. In any
case in which the Board is performing a function of the Committee under the
Plan, each reference to the Committee herein shall be deemed to refer to the
Board (unless the context shall otherwise require).

4. PARTICIPATION

Each Director of the Company shall become a Participant of the Plan on the
later of (i) the Effective Date or (ii) the date such individual first becomes
a Director.

5. AWARD OF UNITS

5.01 Initial Award of Units. On the Effective Date, each Director who is a
Participant on January 1, 1997 shall be awarded the number of Units equal to
the present value of benefits accrued by that Director through December 31,
1996 under the UGI Corporation Retirement Plan for Outside Directors, as
determined by an actuary appointed by the Committee. The value of each Unit to
be credited to a Participant's Account pursuant to this section shall be equal
to the average of the closing sales prices for the Common Stock as reported on
the New York Stock Exchange Composite Tape for each trading day in the period
October 1, 1996 through December 31, 1996.

5.02 Annual Award of Units. On the first day of each Plan Year, each
Participant shall receive an award of 630 Units. Such awarded Units shall be
credited to each Participant's Account as specified in Section 5.04 below. Any
Participant who was not a Participant on the first day of the Plan Year shall
receive, on the date such individual becomes a Participant, a pro-rata share
of the annual award of Units determined based on the number of calendar
quarters during the Plan Year that such Participant is expected to serve as a
Director. A Director will be deemed to serve the entire quarter during which
he is a Director at least one day.

5.03 Dividend Equivalents

(a) Dividend Equivalent to be Credited. From the date of grant of each
Unit to a Participant until the Participant's Account has been fully
distributed, the Company shall credit to each Participant's Account on each
record date for the payment of a dividend by the Company on its Common
Stock, an amount equal to the Dividend Equivalent associated with the Units
in the Account.

(b) Conversion to Units. On the last day of each Plan Year, the amount of
the Dividend Equivalents credited to the Participant's Account during that
Plan Year shall be converted to a number of Units, based on the Unit Value
on that day. Notwithstanding the foregoing, in the event of a Change of
Control or in the event the Participant dies or Separates from Service
prior to the last day of the Plan Year, as soon as practicable following
such event and in no event later than the date on which Units are redeemed
in accordance with Section 6, the Company shall convert the amount of the
Dividend Equivalents credited to the Participant's Account as of the date
of the Change of Control, death or Separation from Service (the "Conversion
Date") to the number of Units based on the Unit Value on the Conversion
Date.

5.04 Accounts. The Company shall keep records to reflect the number of Units
and Dividend Equivalents credited to each Participant hereunder; provided,
however, that no Participant or any other person shall under any circumstances
acquire any property interest in any specific assets of the

A-4

Company. Fractional Units shall accumulate in the Participant's Account and
shall be added to fractional Units held in such Account to create whole Units.
Nothing contained in this Plan and no action taken pursuant hereto shall
create or be construed to create a fiduciary relationship between the Company
and any Participant or any other person. To the extent that any person
acquires a right to receive payment from the Company hereunder, such right
shall be no greater than the right of any unsecured general creditor of the
Company.

6. EVENTS REQUIRING REDEMPTION OF UNITS

The Company shall redeem Units credited to a Participant's Account only at
the times and in the manner prescribed by the further terms of this Section 6.
To determine the total amount to be paid, all redemptions shall be made by
providing a number of shares of Common Stock equal to the number of Units
being redeemed; provided, however, that any fractional Units credited to a
Participant's Account shall be paid in cash in an amount equal to the Unit
Value of such fractional Unit.

6.01 Death. In the event a Participant dies, the Company shall redeem all of
the Units then credited to the Participant's Account. Any such redemption
shall be paid to the Participant's Beneficiary in the form of Common Stock.

6.02 Separation from Service. In the event a Participant Separates from
Service, the Company shall redeem all of the Units then credited to the
Participant's Account as soon as practicable following such Separation from
Service. Any such redemption shall be paid in the form of Common Stock. A
Participant may elect to defer receipt of such payment until such Participant
attains a specified age, not to exceed age sixty-five (65). In addition, a
Participant may elect to receive such payment in (i) a single distribution or
(ii) annual or quarterly installments over a period not to exceed ten (10)
years. Both such elections made hereunder must be made no later than September
30th of the calendar year preceding the year of Separation from Service.
Dividend Equivalents will be credited to such Participant's Account in
accordance with Section 5 until the full amount of the Participant's Account
has been distributed. Each installment payment shall be calculated by dividing
the Participant's total Account balance as of such payment date by the number
of payments remaining in the installment period.

6.03 Change of Control. Unless otherwise provided by the Committee, in the
event of a Change of Control of the Company, the Company shall redeem all of
the Units then credited to the Participant's Account. Any such redemption
shall be made in the form of cash. The amount paid shall equal the product of
the number of Units being redeemed multiplied by the then Unit Value. A
Participant may elect to defer receipt of such payment until such Participant
attains a specified age, not to exceed age sixty-five (65). In addition, a
Participant may elect to receive such payment in (i) a single distribution or
(ii) annual or quarterly installments over a period not to exceed ten (10)
years. Both such elections made hereunder must be made no later than September
30th of the calendar year preceding the year of the Change of Control.

7. RETAINER AWARDS

7.01 Annual Grants. The Committee is authorized, subject to limitations
under applicable law, to grant to any Participant awards of Common Stock in
lieu of a portion of their annual retainer. Unless otherwise determined by the
Committee, the number of shares of Common Stock to be paid to Directors
annually under this Section 7.01 will be equal to (i) the amount by which the
annual retainer at the rates then in effect exceeds $18,500 divided by (ii)
the Fair Market Value of the Common Stock as of the first day of the Plan
Year. The shares of Common Stock to be paid pursuant to this section will
become due on the date of the first meeting of the Board of Directors during
the Plan Year. No fractional shares of Common Stock will be granted; instead,
the amount remaining will be paid to the Participant in cash. As promptly as
practicable, the Company will issue to the Participant shares of Common Stock
registered in the name of the Participant (or, if directed by the Participant,
in joint

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names of the Participant and his or her spouse). Any Participant who commences
service during the Plan Year shall receive a pro-rata share of the annual
retainer, the same proportion of which will be paid in Common Stock as was
paid to a Director serving a full Plan Year, determined based on the number of
calendar quarters during the Plan Year that the Participant is expected to
serve as a Director.

7.02 Deferral of Retainers and Meeting Attendance Fees. A Participant may
elect, no later than the end of the calendar year preceding the calendar year
of payment to convert all or any part of (i) the cash portion of the annual
retainer, (ii) Committee Chair annual retainer, and (iii) meeting attendance
fees, into Units under this Plan, payable in accordance with the terms of the
Plan. Dividend Equivalents will be credited and Units will be awarded to such
Participant's Account in accordance with the provisions of Section 5.03 during
such deferral period.

8. MISCELLANEOUS

8.01 Transferability. No Unit awarded under this Plan shall be transferred,
assigned, pledged or encumbered by the Participant, and a Unit may be redeemed
during the lifetime of a Participant only from such Participant.

8.02 No Rights as Shareholder. No Participant shall have any rights as a
shareholder of the Company, including the right to any cash dividends, or the
right to vote, as a result of the grant to the Participant, or the
Participant's holding of, any Units.

8.03 Adjustment Upon Acquisitions, Dispositions or other Events not in the
Ordinary Course of Business. Notwithstanding anything herein to the contrary,
if the Company's financial performance is affected by any event that is of a
non-recurring nature including an acquisition or disposition of the assets or
stock of a business, the Committee, in its sole discretion, may make such
adjustments in the number of Units or the Unit Value of each Unit for the then
current Plan Year as it shall determine to be equitable and appropriate in
order to make the value of each Unit, as nearly as may be practicable,
equivalent to the value of the Unit immediately prior to such event.

8.04 No Rights to Service. Nothing in this Plan, and no action taken
pursuant hereto, shall affect the Participant's term of service as a Director.

8.05 Notices. Any notice hereunder to be given to the Company shall be in
writing and shall be delivered in person to the Secretary of the Company, or
shall be sent by registered mail, return receipt requested, to the Secretary
of the Company at the Company's executive offices, and any notice hereunder to
be given to the Participant shall be in writing and shall be delivered in
person to the Participant, or shall be sent by registered mail, return receipt
requested, to the Participant at his last address as shown in the employment
records of the Company. Any notice duly mailed in accordance with the
preceding sentence shall be deemed given on the date postmarked.

8.06 Termination and Amendment of the Plan/Modification of Units. The Plan
may be terminated, modified or amended by the Committee at any time, except
with respect to any Units then outstanding under the Plan; provided, however,
that the Committee may accelerate the redemption of any Units then outstanding
as if a redemption were then being made under Section 6.

8.07 Miscellaneous.

(a) If the Company shall find that any person to whom any payment is
payable under this Plan is unable to care for his affairs because of
illness or accident, or is a minor, any payment due (unless a prior claim
therefor shall have been made by a duly appointed guardian, committee or
other legal representative) may be paid to the spouse, a child, a parent,
or a brother or sister, or to any person deemed by the Company to have
incurred expense for such person otherwise entitled

A-6

to payment, in such manner and proportions as the Company may determine.
Any such payment shall be a complete discharge of the liabilities of the
Company under this Plan.

(b) This Plan shall be binding upon and inure to the benefit of the
Company, its successors and assigns and the Participant and his heirs,
executors, administrators and legal representatives.

8.08 Shareholder Approval. This Plan shall be effective on the Effective
Date, subject to the approval by a majority of the shareholders of the Company
at the next annual meeting following the Effective Date.

A-7

ANNEX B

UGI CORPORATION

1997 STOCK OPTION AND DIVIDEND EQUIVALENT PLAN

1. PURPOSE AND DESIGN

The purpose of this Plan is to assist the Company in securing and retaining
key corporate executives of outstanding ability, who are in a position to
significantly participate in the development and implementation of the
Company's strategic plans and thereby contribute materially to the long-term
growth, development and profitability of the Company, by affording them an
opportunity to purchase its Stock under options. The Plan is designed to align
directly long-term executive compensation with tangible, direct and
identifiable benefits realized by the Company's shareholders.

2. DEFINITIONS

Whenever used in this Plan, the following terms will have the respective
meanings set forth below:

2.01 "Board" means UGI's Board of Directors as constituted from time to
time, provided that whenever in this Plan Board approval is required, such
approval shall require the affirmative vote of a majority of members of the
Board who are not participants in the Plan.

2.02 "Committee" means the Compensation and Management Development Committee
of the Board or its successor.

2.03 "Company" means UGI Corporation, a Pennsylvania corporation, any
successor thereto and any Subsidiary which adopts this plan, with the approval
of the Committee, by executing a participation and joinder agreement.

2.04 "Comparison Group" means the group determined by the Committee (no
later than ninety (90) days after the commencement of the Performance Period)
consisting of the Company and such other companies deemed by the Committee (in
its sole discretion) to be reasonably comparable to the Company and set forth
in Exhibit 1.

2.05 "Date of Grant" means the date the Committee makes an Option grant.

2.06 "Dividend Equivalent" means an amount determined by multiplying the
number of shares of Stock subject to an Option on the Date of Grant (whether
or not the Option is ever exercised with respect to any or all shares of Stock
subject thereto) by the per-share cash dividend, or the per-share fair market
value (as determined by the Committee) of any dividend in consideration other
than cash, paid by the Company on its Stock on a dividend payment date.

2.07 "Employee" means a regular full-time salaried employee (including
officers and directors who are also employees) of the Company.

2.08 "Fair Market Value" of Stock means the average, rounded to the next
highest one-eighth of a point (.125), of the highest and lowest sales prices
thereof on the New York Stock Exchange on the day on which Fair Market Value
is being determined, as reported on the Composite Tape for transactions on the
New York Stock Exchange; provided, however, in the case of a cashless exercise
pursuant to Section 7.4(iv), the Fair Market Value shall be the actual sale
price of the shares issued upon exercise of the Option. In the event that
there are no Stock transactions on the New York Stock Exchange on such day,
the Fair Market Value will be determined as of the immediately preceding day
on which there were Stock transactions on that exchange.

B-1

2.09 "Option" means the right to purchase Stock pursuant to the relevant
provisions of this Plan at the Option Price for a specified period of time,
not to exceed ten years from the Date of Grant, which period of time shall be
subject to earlier termination prior to exercise in accordance with Sections
11, 12 and 13 of this Plan.

2.10 "Option Price" means an amount per share of Stock purchasable under an
Option designated by the Committee on the Date of Grant of an Option to be
payable upon exercise of such Option. The Option Price shall not be less than
100% of the Fair Market Value of the Stock determined on the Date of Grant.

2.11 "Participant" means an Employee designated by the Committee to
participate in the Plan; provided, however, that no Employee who is not then a
Participant in the Plan may be designated by the Committee to participate in
the Plan at any time during the last full year of a Performance Period.

2.12 "Performance Period" means a period selected by the Committee over
which the total return realizable by a shareholder of the Company on a share
of Stock is compared to that realizable by shareholders of companies in the
Comparison Group in accordance with Section 8.2 of the Plan in order to
determine whether Dividend Equivalents associated with an Option will be
payable to a Participant.

2.13 "Stock" means the Common Stock of UGI or such other securities of UGI
as may be substituted for Stock or such other securities pursuant to Section
14.

2.14 "Subsidiary" means any corporation or partnership, at least 20% of the
outstanding voting stock, voting power or partnership interest of which is
owned respectively, directly or indirectly, by the Company.

2.15 "Termination without Cause" means termination for the convenience of
the Company for any reason other than (i) misappropriation of funds, (ii)
habitual insobriety or substance abuse, (iii) conviction of a crime involving
moral turpitude, or (iv) gross negligence in the performance of duties, which
gross negligence has had a material adverse effect on the business,
operations, assets, properties or financial condition of the Company.

2.16 "UGI" means UGI Corporation, a Pennsylvania corporation or any
successor thereto.

3. NUMBER AND SOURCE OF SHARES AVAILABLE FOR OPTIONS--MAXIMUM ALLOTMENT

The number of shares of Stock which may be made the subject of Options under
this Plan at any one time may not exceed 1,500,000 in the aggregate, including
shares acquired by Participants through exercise of Options under this Plan,
subject, however, to the adjustment provisions of Section 14 below. The
maximum number of shares of Stock which may be the subject of grants to any
one individual in any calendar year shall be 300,000. If any Option expires or
terminates for any reason without having been exercised in full, the
unpurchased shares subject to the Option will again be available for the
purposes of the Plan. Shares which are the subject of Options may be
previously issued and outstanding shares of the Stock reacquired by the
Company and held in its treasury, or may be authorized but unissued shares of
Stock, or may be partly of each.

4. DURATION OF THE PLAN

The Plan will remain in effect until all Stock subject to it has been
purchased pursuant to the exercise of Options or all such Options have
terminated without exercise. Notwithstanding the foregoing, no Option may be
granted after December 31, 2006.

B-2

5. ADMINISTRATION

The Plan will be administered by the Committee. Subject to the express
provisions of the Plan, the Committee will have authority, in its complete
discretion, to determine the Employees to whom, and the time or times at
which, Options will be granted, the number of shares to be subject to each
Option, the Option Price to be paid for the shares upon the exercise of each
Option, and the period within which each Option may be exercised. In making
such determinations, the Committee may take into account the nature of the
services rendered by an Employee, the present and potential contributions of
the Employee to the Company's success and such other factors as the Committee
in its discretion deems relevant. Subject to the express provisions of the
Plan, the Committee will also have authority to construe and interpret the
Plan, to prescribe, amend and rescind rules and regulations relating to it, to
determine the terms and provisions of the respective stock option agreements
required by Section 7.2 of the Plan (which need not be identical), and to make
all other determinations (including factual determinations) necessary or
advisable for the orderly administration of the Plan. It is the intent of the
Company that the Plan should comply in all applicable respects with Rule 16b-3
under the Exchange Act so that transactions relating to any Option and
Dividend Equivalents granted to a Participant who is subject to Section 16 of
the Exchange Act shall be exempt under Rule 16b-3. Accordingly, if any
provision of the Plan or any agreement relating to an Option does not comply
with the requirements of Rule 16b-3 as then applicable to any such
Participant, such provision shall be construed or deemed amended to the extent
necessary to conform to such requirements with respect to such Participant.
Any other provision of the Plan notwithstanding, the Board may perform any
function of the Committee under the Plan, including without limitation for the
purpose of ensuring that transactions under the Plan by Participants who are
subject to Section 16 of the Exchange Act in respect of the Company are exempt
under Rule 16b-3. In any case in which the Board is performing a function of
the Committee under the Plan, each reference to the Committee herein shall be
deemed to refer to the Board (unless the context shall otherwise require).

6. ELIGIBILITY

Options may be granted only to Employees (including directors who are also
Employees of the Company) who, in the sole judgment of the Committee, are
designated by the Committee as individuals who are in a position to
significantly participate in the development and implementation of the
Company's strategic plans and thereby contribute materially to the continued
growth and development of the Company and to its future financial success.

7. OPTIONS

7.1 Grant of Options. Subject to the provisions of Sections 2.11 and 3,
Options may be granted to Participants at any time and from time to time as
may be determined by the Committee. The Committee will have complete
discretion in determining the number of Options granted to each Participant
and the number of shares of Stock subject to such Options.

7.2 Option Agreement. As determined by the Committee on the Date of Grant,
each Option will be evidenced by a stock option agreement (substantially in
the form included in Exhibit 2 attached hereto) that shall, among other
things, specify the Date of Grant, the Option Price, the duration of the
Option and the number of shares of Stock to which the Option pertains.

7.3 Exercise and Vesting.

(a) Except as otherwise specified by the Committee, an Option shall be
fully and immediately exercisable on the Date of Grant. Notwithstanding the
foregoing, in the event that any such Options are not by their terms
immediately exercisable, the Committee may accelerate the
exercisability of any or all outstanding Options at any time for any
reason. No Option shall be exercisable on or after the tenth anniversary of
the Date of Grant.

B-3

(b) Except as otherwise specified by the Committee, in the event that a
Participant holding an Option ceases to be an Employee, the Option held by
such Participant shall be exercisable only with respect to that number of
shares of Stock with respect to which it is already exercisable on the date
such Participant ceases to be an Employee. However, if a Participant
holding an Option ceases to be an Employee by reason of (i) a retirement
under the Company's retirement plan, (ii) Termination without Cause, (iii)
disability, or (iv) death, the Option held by any such Participant shall
thereafter become immediately exercisable with respect to the total number
of shares of Stock available under such Option and shall remain exercisable
until the earlier of the expiration date of the Option or the expiration of
the thirteen (13) month period following the date of such cessation of
employment.

(c) Notwithstanding the foregoing, in the event of any merger or
consolidation of any other corporation with or into UGI, or the sale of all
or substantially all of the assets of UGI or an offer to purchase made by a
party other than UGI to all shareholders of UGI for all or any substantial
portion of the outstanding Stock, a Participant shall be permitted to
exercise all outstanding Options (to the extent not otherwise exercisable
by their terms) prior to the effective date of any such merger,
consolidation or sale or the expiration of any such offer to purchase,
unless otherwise determined by the Committee, no later than thirty (30)
days prior to the effective date of such transaction or the expiration of
such offer.

(d) Notwithstanding anything contained in this Section 7.3 with respect
to the number of shares of Stock subject to an Option with respect to which
such Option is or is to become exercisable, no Option, to the extent that
it has not previously been exercised, shall be exercisable after it has
terminated, including without limitation, after any termination of such
Option pursuant to Sections 11, 12 and 13 hereof.

7.4 Payment. The Option Price upon exercise of any Option shall be payable
to the Company in full (i) in cash or its equivalent, (ii) by tendering shares
of previously acquired Stock already beneficially owned by the Participant for
more than one year and having a Fair Market Value at the time of exercise
equal to the total Option Price, (iii) by applying Dividend Equivalents
payable to the Participant in accordance with Section 8 of the Plan in an
amount equal to the total Option Price, (iv) by payment through a broker in
accordance with procedures permitted by Regulation T of the Federal Reserve
Board, (v) by such other method as the Committee may approve, or (vi) by a
combination of (i), (ii), (iii), (iv) and/or (v). The cash proceeds from such
payment will be added to the general funds of the Company and shall be used
for its general corporate purposes. Any shares of Stock tendered to UGI in
payment of the Option Price will be added by UGI to its Treasury Stock to be
used for its general corporate purposes.

8. DIVIDEND EQUIVALENTS

8.1 Amount of Dividend Equivalents Credited. From the Date of Grant of an
Option to a Participant (or, in the case of an Option granted after the date
of commencement of a Performance Period to a new Participant or to a
Participant with changed responsibilities, in which event, from such date not
earlier than the date of commencement of the Performance Period as is
designated by the Committee) until the earlier of (i) the end of the
applicable Performance Period or (ii) the date of disability, death or
termination of employment for any reason (including retirement), of a
Participant, the Company shall keep records for such Participant ("Account")
and shall credit on each payment date for the payment of a dividend made by
UGI on its Stock an amount equal to the Dividend Equivalent associated with
such Option. Notwithstanding the foregoing, a Participant may not accrue
during any calendar year Dividend Equivalents in excess of $1,000,000. Except
as set forth in Section 8.5 below, no interest shall be credited to any such
Account.

B-4

8.2 Payment of Credited Dividend Equivalents. The Committee will determine
(no later than ninety (90) days after the commencement of the Performance
Period) and set forth on Exhibit 1 measurable criteria pursuant to which the
total return realizable by a shareholder of the Company on a share of Stock
over the applicable Performance Period can be compared to that realizable over
the same Performance Period by shareholders of the Comparison Group. The
extent to which a Participant receives payment of the Dividend Equivalents
associated with an Option and recorded in his Account during any particular
Performance Period shall be determined by comparing (through use of the
selected measurable criteria) the aforementioned total return realizable by a
shareholder of the Company to that realizable by shareholders of the
Comparison Group. Payments shall be made after the end of the applicable
Performance Period according to the following table (with results falling
between table values being interpolated):

PERCENT OF COMPANIES IN COMPARISON GROUP
HAVING TOTAL RETURN TO SHAREHOLDERS PERCENT OF DIVIDEND
LESS THAN THAT TO COMPANY'S SHAREHOLDERS EQUIVALENTS PAYABLE
---------------------------------------- -------------------

100................................................. 200
75.................................................. 150
50.................................................. 75
less than 50........................................ 0

8.3 Timing of Payment of Dividend Equivalents.

(a) Except as otherwise determined by the Committee, in the event of the
(i) termination of an Option prior to exercise pursuant to Sections 11, 12
or 13 hereof, or (ii) acceleration of the exercise date of an Option
pursuant to Section 7.3 hereof, in either case prior to the end of the
applicable Performance Period, no payments of Dividend Equivalents
associated with any Option shall be made (A) prior to the end of the
applicable Performance Period and (B) to any Participant whose employment
by the Company terminates prior to the end of the applicable Performance
Period for any reason other than retirement under the Company's retirement
plan, death, disability or Termination without Cause. As soon as
practicable after the end of such Performance Period, the Committee will
certify and announce the results for each Performance Period prior to any
payment of Dividend Equivalents and unless a Participant shall have made an
election under Section 8.6 to defer receipt of any portion of such amount,
a Participant shall receive the aggregate amount of Dividend Equivalents
payable to him.

(b) Notwithstanding anything to the contrary in this Section 8.3, unless
a payment of Dividend Equivalents associated with an Option is being made
upon full exercise or termination of such Option, no Dividend Equivalents
shall be paid (either at the end of the applicable Performance Period or on
a date such Dividend Equivalents are scheduled to be paid pursuant to a
deferral election) if the average Fair Market Value of Stock for a period
of thirty (30) consecutive business days immediately preceding the end of
the applicable Performance Period or the date such deferred payment is
scheduled to be made (as the case may be) is less than the exercise price
of the Option to which such Dividend Equivalents were associated, and such
payment shall instead be made at the earlier of (i) such time as the
average Fair Market Value of Stock over a period of ninety (90) consecutive
business days thereafter exceeds the exercise price of such Option, or (ii)
the termination or expiration date of such Option.

8.4 Form of Payment for Dividend Equivalents. The Committee shall have the
sole discretion to determine whether the Company's obligation in respect of
payment of Dividend Equivalents shall be paid solely in credits to be applied
toward payment of the Option Price, solely in cash or partly in such credits
and partly in cash.

8.5 Interest on Dividend Equivalents. From a date which is thirty (30) days
after the end of the applicable Performance Period until the date that all
Dividend Equivalents associated with such

B-5

Option and payable to a Participant are paid to such Participant, the Account
maintained by the Company in its books and records with respect to such
Dividend Equivalents shall be credited with interest at a market rate
determined by the Committee.

8.6 Deferral of Dividend Equivalents. A Participant shall have the right to
defer receipt of any Dividend Equivalent payments associated with an Option if
he shall elect to do so on or prior to December 31 of the year preceding the
beginning of the last full year of the applicable Performance Period (or such
other time as the Committee shall determine is appropriate to make such
deferral effective under the applicable requirements of federal tax laws). The
terms and conditions of any such deferral (including the period of time
thereof) shall be subject to approval by the Committee and all deferrals shall
be made on a form provided a Participant for this purpose.

9. WRITTEN NOTICE, ISSUANCE OF STOCK, SHAREHOLDER PRIVILEGES AND PARTIAL
EXERCISE

9.1 Written Notice. A Participant wishing to exercise an Option must give
written notice to the Company in the form and manner prescribed by the
Committee, indicating the date of award, the number of shares as to which the
Option is being exercised, and such other information as may be required by
the Committee. Full payment for the shares pursuant to the Option must be
received by the close of business on the day the Option is exercised. Except
as provided in Sections 11, 12 and 13, no Option may be exercised at any time
unless the Participant is then an Employee of the Company.

9.2 Issuance of Stock. As soon as practicable after the receipt of written
notice and payment, the Company will, without stock transfer taxes to the
Participant or to any other person entitled to exercise an Option pursuant to
this Plan, deliver to, or credit electronically on behalf of, the Participant,
the Participant's designee or such other person the requisite number of shares
of Stock.

9.3 Privileges of a Shareholder. A Participant or any other person entitled
to exercise an Option under this Plan will have no rights as a shareholder
with respect to any Stock covered by the Option until the due exercise of the
Option and issuance of such Stock.

9.4 Partial Exercise. An Option granted under this Plan may be exercised as
to any lesser number of shares than the full amount for which it could be
exercised. Such a partial exercise of an Option will not affect the right to
exercise the Option from time to time in accordance with this Plan as to the
remaining shares subject to the Option.

10. NON-TRANSFERABILITY OF OPTIONS

No Option, rights to Dividend Equivalents or other rights granted under the
Plan shall be transferable otherwise than by will or the laws of descent and
distribution, and an Option may be exercised, during the lifetime of the
Participant, only by the Participant. Notwithstanding the foregoing, the
Committee may provide that a Participant may transfer Options to family
members or other persons or entities according to such terms as the Committee
may determine; provided that the Participant receives no consideration for the
transfer of an Option and the transferred Option shall continue to be subject
to the same terms and conditions as were applicable to the Option immediately
before the transfer.

11. TERMINATION OF EMPLOYMENT (OTHER THAN BY REASON OF DEATH OR DISABILITY)

Each Option, to the extent that it has not previously been exercised, will
terminate when the Participant holding such Option (while living) ceases to be
an Employee of the Company, unless such cessation of employment is (i) on
account of a Termination without Cause, or (ii) a retirement under the
Company's retirement plan, in either of which events the Option shall be fully
and immediately exercisable (to the extent not otherwise exercisable by its
terms) and will terminate upon the earlier of the expiration date of the
Option or the expiration of the thirteen (13) month period following the date

B-6

of such cessation of employment. The Committee will have authority to
determine whether an authorized leave of absence or absence on military or
governmental service will constitute a termination of employment for the
purposes of this Plan. The Committee shall have sole discretion to determine
the effect of any change in the duties and responsibilities of a Participant
while that Participant continues to be an Employee of the Company on Options
granted under this Plan which are not then exercisable and on Dividend
Equivalents not then payable under Section 8.3 of the Plan.

12. DISABILITY

If a Participant is determined to be "disabled" (as defined under the
Company's long-term disability plan), the Option theretofore granted to such
Participant shall be fully and immediately exercisable (to the extent not
otherwise exercisable by its terms) at any time prior to the earlier of the
expiration date of the Option or the expiration of the thirteen (13) month
period following the date of such determination.

13. DEATH OF PARTICIPANT

In the event of the death of a Participant while employed by the Company,
the Option theretofore granted to such Participant shall be fully and
immediately exercisable (to the extent not otherwise exercisable by its terms)
at any time prior to the earlier of the expiration date of the Option or the
expiration of the thirteen (13) month period following the Participant's
death. Death of a Participant after such Participant has ceased to be employed
by the Company will not affect the otherwise applicable period for exercise of
the Option determined pursuant to Section 11 or 12. Such Option may be
exercised by the estate of the Participant or by any person to whom the
Participant may have bequeathed the Option or whom the Participant may have
designated to exercise the same under the Participant's last will, or by the
Participant's personal representatives if the Participant has died intestate.

14. ADJUSTMENT OF NUMBER AND PRICE OF SHARES, ETC.

Notwithstanding anything to the contrary in this Plan, in the event any
recapitalization, reorganization, merger, consolidation, spin-off,
combination, repurchase, exchange of shares or other securities of UGI, stock
split or reverse split, extraordinary dividend, liquidation, dissolution,
significant corporate transaction (whether relating to assets or stock)
involving UGI, or other extraordinary transaction or event affects Stock such
that an adjustment is determined by the Committee to be appropriate in order
to prevent dilution or enlargement of Participants' rights under the Plan,
then the Committee may, in a manner that is equitable, adjust (i) any or all
of the number or kind of shares of Stock reserved for issuance under the Plan,
(ii) the maximum number of shares of Stock which may be the subject of grants
to any one individual in any calendar year, (iii) the number or kind of shares
of Stock to be subject to Options thereafter granted under the Plan, (iv) the
number and kind of shares of Stock issuable upon exercise of outstanding
Options, (v) the Option Price per share thereof, and/or (vi) the terms and
conditions applicable to Dividend Equivalents, provided that the number of
shares subject to any Option will always be a whole number. Any such
determination of adjustments by the Committee will be conclusive for all
purposes of the Plan and of each Option, whether a stock option agreement with
respect to a particular Option has been theretofore or is thereafter executed.

15. LIMITATION OF RIGHTS

Nothing contained in this Plan shall be construed to give an Employee any
right to be granted an Option except as may be authorized in the discretion of
the Committee. The granting of an Option under this Plan shall not constitute
or be evidence of any agreement or understanding, expressed or

B-7

implied, that the Company will employ a Participant for any specified period
of time, in any specific position or at any particular rate of remuneration.

16. AMENDMENT OR TERMINATION OF PLAN

Subject to Board approval, the Committee may at any time, and from time to
time, alter, amend, suspend or terminate this Plan without the consent of the
Company's shareholders or Participants, except that any such alteration,
amendment, suspension or termination shall be subject to the approval of the
Company's shareholders within one year after such Committee and Board action
if such shareholder approval is required by any federal or state law or
regulation or the rules of any stock exchange or automated quotation system on
which the Stock is then listed or quoted, or if the Committee in its
discretion determines that obtaining such shareholder approval is for any
reason advisable. No termination or amendment of this Plan may, without the
consent of the Participant to whom any Option has previously been granted,
adversely affect the rights of such Participant under such Option, including
the Dividend Equivalents associated with such Option. Notwithstanding the
foregoing, the Committee may make minor amendments to this Plan which do not
materially affect the rights of Participants or significantly increase the
cost to the Company.

17. TAX WITHHOLDING

Upon exercise of any Option under this Plan, the Company will require the
recipient of the Stock to remit to the Company an amount sufficient to satisfy
federal, state and local withholding tax requirements. However, to the extent
authorized by rules and regulations of the Committee, the Company may withhold
or receive Stock and make cash payments in respect thereof in satisfaction of
a recipient's tax obligations, including tax obligations in excess of
mandatory withholding requirements.

18. GOVERNMENTAL APPROVAL

Each Option will be subject to the requirement that if at any time the
listing, registration or qualification of the shares covered thereby upon any
securities exchange, or under any state or federal law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as a
condition of or in connection with the granting of such Option or the purchase
of shares thereunder, no such Option may be exercised in whole or in part
unless and until such listing, registration, qualification, consent or
approval has been effected or obtained free of any conditions not acceptable
to the Board.

19. EFFECTIVE DATE OF PLAN

This Plan will become effective as of December 10, 1996, subject to
ratification by the Company's shareholders prior to December 10, 1997.

20. SUCCESSORS

This Plan shall be binding upon and inure to the benefit of the Company, its
successors and assigns and the Participant and his heirs, executors,
administrators and legal representatives.

21. GOVERNING LAW

The validity, construction, interpretation and effect of the Plan and option
agreements issued under the Plan shall be governed exclusively by and
determined in accordance with the law of the Commonwealth of Pennsylvania.

B-8

EXHIBIT 1

1. PERFORMANCE PERIOD

January 1, 1997 to December 31, 1999.

2. COMPARISON GROUP

American Electric Power Company, Inc. NICOR, Inc.
Baltimore Gas & Electric Company Noram Energy Corporation
Carolina Power & Light Company Northern States Power Company
Central & South West Corporation Ohio Edison Company
Cinergy Corporation ONEOK, Inc.
Coastal Corporation Pacific Enterprises
Columbia Gas System, Inc. Pacific Gas & Electric Company
Consolidated Edison Co. of N.Y., Inc. Pacificorp
Consolidated Natural Gas Company PanEnergy Corp.
Dominion Resources, Inc. PECO Energy Company
DTE Energy Company Peoples Energy Corporation
Duke Power Company PP&L Resources, Inc.
Eastern Enterprises Public Service Enterprise Group,
Edison International Inc.
Enron Corporation Sonat, Inc.
Entergy Corporation Southern Company
FPL Group, Inc. Texas Utilities Company
GPU, Inc. Unicom Corporation
Houston Industries, Inc. Union Electric Company
Niagara Mohawk Power Corporation The Williams Companies, Inc.

3. COMPARISON CRITERIA

For purposes of the Plan, "Total Return" is the change in the market value
of one share of common stock of each company in the Comparison Group over the
Performance Period, plus the amount of dividends paid or the value of other
distributions made with respect to such stock, reinvested in the stock, over
the same period.

The initial market value of each share of common stock to be measured during
the Performance Period (January 1, 1997 through December 31, 1999) will be the
average of the closing prices of each such stock on the New York Stock
Exchange Composite Tape for all trading days during the three calendar months
prior to the commencement of the Performance Period.

The final market value of each share of common stock to be measured will be
the average of the closing prices for such stock on the New York Stock
Exchange Composite Tape for all trading days during the final three months of
the Performance Period.

EXHIBIT 2

UGI CORPORATION

1997 STOCK OPTION AND DIVIDEND EQUIVALENT PLAN
STOCK OPTION AGREEMENT

This Stock Option Agreement is dated as of [date of grant]. The
parties are UGI Corporation, a Pennsylvania corporation ("UGI"), and
("Employee"), an employee of UGI or a Subsidiary of UGI (collectively
referred to as the "Company"), residing at .

In consideration of the mutual agreements set forth below and other good and
valuable consideration the receipt and adequacy of which is hereby
acknowledged, and intending to be legally bound by this Agreement, the Company
and Employee agree as follows:

1. INCORPORATION OF PLAN BY REFERENCE. This Stock Option Agreement evidences
the grant of an Option to Employee under the Company's 1997 Stock Option and
Dividend Equivalent Plan (the "Plan"), a copy of which is attached hereto. All
of the terms, conditions, and other provisions of the Plan are hereby
incorporated by reference into this Stock Option Agreement (the "Agreement").
Capitalized terms used in this Agreement but not defined herein shall have the
same meanings as in the Plan. If there is any conflict between the provisions
of this Agreement and the provisions of the Plan, the provisions of the Plan
shall govern.

2. GRANT OF OPTION AND DIVIDEND EQUIVALENTS.

(a) Option. UGI hereby confirms the grant to Employee as of the date
hereof of a non-qualified stock option to purchase all or any part of an
aggregate of shares of its Stock at the Option Price of $ per
share, subject to all the terms and conditions set forth in this Agreement
and in the Plan (the "Option"). The Option granted hereunder is not
intended to constitute an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended. The terms of
the Option are subject to adjustment in certain circumstances, as provided
in the Plan. The Employee shall be required to pay no consideration for the
grant of the Option, except for his or her other agreements set forth
herein.

(b) Dividend Equivalents. UGI hereby confirms that, in connection with
the grant of the Option, Employee is entitled to the crediting of Dividend
Equivalents in accordance with Section 8 of the Plan (subject to all
conditions, including the risk of forfeiture, set forth in Section 8 of the
Plan). The Performance Period with respect to such Dividend Equivalents
shall begin on , 19 and end on , 19 . The exercise of any
portion of the Option prior to expiration of the Performance Period will
not result in the forfeiture of Dividend Equivalents credited with respect
to such portion of the Option.

3. VESTING AND TERMINATION OF OPTION.

(a) Vesting Schedule. The Option shall be exercisable with respect to
of the total number of shares of Stock subject to the Option on
. The Option may be exercised in whole or in part and from time to
time, and any partial exercise of the Option for less than the full number
of shares underlying the Option or as to which the Option is then
exercisable will not affect Employee's right to exercise the Option from
time to time in accordance with this Agreement as to the remaining shares.

(b) Acceleration of Vesting. The provisions of Section 3(a) above
notwithstanding, the exercisability of the Option may accelerate in
accordance with Section 7.3 of the Plan.

(c) Expiration of Option. The Option, to the extent it has not been
previously exercised, shall expire at 5:00 p.m. (Eastern Time) on ,
20 , unless earlier terminated in accordance with the terms of the Plan.

4. EXERCISE AND PAYMENT.

(a) Notice of Exercise and Payment of Purchase Price. The Option shall be
exercised by the giving of written notice of exercise, in the form attached
as Exhibit A-1 (or with appropriate changes if notice is given by a person
other than Employee), to the Secretary of UGI, signed by the Employee or
other person entitled to exercise the Option (the "Notice") specifying the
number of shares to be purchased, the Date of Grant of the Option and the
method of payment. The notice shall be accompanied by payment in full of
the aggregate Option Price for all such shares being purchased and shall be
received by 5:00 p.m. on the day the Notice is delivered to the Secretary
of UGI. The Option Price shall be payable to UGI either (i) in cash or its
equivalent, (ii) by tendering shares of previously acquired Stock already
beneficially owned by Employee for more than one year and having an
aggregate Fair Market Value at the time of exercise equal to the Option
Price being paid thereby, (iii) by applying Dividend Equivalents payable to
the Participant in accordance with Section 8 of the Plan in an amount equal
to the Option Price being paid thereby (if and to the extent such Dividend
Equivalents have become payable in the form of credits to be applied toward
payment of the Option Price), (iv) by payment through a broker in
accordance with procedures permitted by Regulation T of the Federal Reserve
Board, (v) by such other method as the Committee may approve, or (vi) by a
combination of (i), (ii), (iii), (iv) and/or (v). Certificates for any
shares of Stock so tendered in payment of the Option Price shall be
delivered by Employee to UGI in negotiable form, duly endorsed in blank or
with separate stock powers attached, and shall be delivered free and clear
of all liens, encumbrances, claims and any other charges thereon of any
kind.

(b) Issuance of Stock. Subject to the provisions of Section 6 below, such
exercise shall be effective upon receipt by the Secretary of UGI of such
written notice and payment, following which the Treasurer shall deliver to,
or credit electronically on behalf of, Employee or such other person as may
be entitled thereto, within an administratively reasonable time, the
purchased shares. UGI agrees to pay all original issue or stock transfer
taxes, if any, on the exercise of the Option and all other fees and
expenses (other than broker fees) necessarily incurred by it in connection
therewith.

(c) Other Methods of Exercise and Payment. In addition to the method of
exercise and payment set forth in Section 4(a) and (b) hereof, the Option
may be exercised and payment to UGI made in accordance with any other
procedures specified in Plan rules and regulations as may be adopted from
time to time by the Committee.

5. TERMINATION OF EMPLOYMENT. The Option will terminate in accordance with
the provisions of the Plan.

6. GOVERNMENTAL AND OTHER APPROVALS. If at any time the listing,
registration or qualification of the shares covered hereby upon any securities
exchange or under any state or federal law, or the consent or approval of any
governmental regulatory body or other person, is necessary or desirable as a
condition of or in connection with the purchase of shares hereunder, the
Option shall not be exercised in whole or in part unless and until such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to UGI. UGI agrees
to use reasonable diligence to obtain any such listing, registration,
qualification, consent or approval. If the Option is exercised at a time that
the offer and sale of shares to be delivered to Employee is not covered by an
effective registration statement under the Securities Act of 1933, as amended,
or any applicable state securities law, Employee shall deliver such investment
representations as UGI may reasonably require, and certificates representing
the shares delivered upon such exercise will bear an

(ii)

appropriate legend and be subject to such stop-transfer orders and other
restrictions as may be applicable under such laws and regulations.

7. NON-TRANSFERABILITY OF OPTION. The Option and rights to Dividend
Equivalents shall not be transferable otherwise than by will or the laws of
descent and distribution, and the Option may be exercised during the lifetime
of the Employee only by the Employee.

8. TAX WITHHOLDING. Employee hereby agrees that, upon exercise of the
Option, the Company shall be entitled to withhold from Employee's regular
salary payments, or to separately receive payment from Employee, of an amount
sufficient to satisfy federal, state and local withholding tax requirements.
If and to the extent authorized under rules and regulations adopted by the
Committee and in effect at the time of the exercise of the Option, Employee
may elect to have the Company withhold from the shares to be delivered upon
the exercise of the Option, or to deliver to the Company from shares of Stock
owned separately by the Employee, a sufficient number of such shares to
satisfy the Employee's federal, state, and local withholding tax obligations
relating to the Option exercise. In such case, the shares withheld or the
shares surrendered will be valued at their Fair Market Value at the time of
the exercise of the Option.

9. MISCELLANEOUS.

(a) No Right to Employment. The granting or the exercise of the Option
shall not constitute or be evidence of any agreement or understanding,
expressed or implied, that the Company will employ the Employee for any
specific period of time, in any specific position or at any particular rate
of remuneration. Nothing herein contained shall affect (i) the Company's
right to terminate Employee's services at any time for any reason
whatsoever; or (ii) the right of Employee to participate or receive
benefits under and in accordance with the provisions of any pension,
retirement, insurance or other employee welfare benefit plan or program of
the Company.

(b) Governing Law. The validity, construction, interpretation and effect
of this Agreement shall exclusively be governed by and determined in
accordance with the laws of the Commonwealth of Pennsylvania. All section
headings are for convenience only and shall in no way modify or restrict
any of the terms or provisions of this Agreement.

(c) Binding Effect; Integration. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and any successors to the
business of the Company, but neither this Agreement nor any rights
hereunder shall be assignable by Employee. This Agreement (including Plan
provisions incorporated by reference herein) constitutes the entire
agreement between the parties with respect to the Option, and supersedes
any prior agreements or documents (other than the Plan) with respect to
such Option. Any amendment, alteration, suspension, discontinuation, or
termination of this Agreement must be expressed in a written instrument
duly executed in the name and on behalf of the Company and by the Employee.

IN WITNESS WHEREOF, the parties hereto have duly signed this Agreement as of
the date first above written.

UGI Corporation

_________________________________ By: _________________________________
Employee Title:

(iii)

EXHIBIT A-1

Corporate Secretary
UGI Corporation
460 North Gulph Road
King of Prussia, PA 19406
Telephone: 610-337-1000
Fax: 610-992-3258

NOTICE OF EXERCISE OF STOCK OPTION--

UGI CORPORATION 1997 STOCK OPTION AND DIVIDEND EQUIVALENT PLAN

I hereby elect to purchase shares of Common Stock of UGI Corporation
(the "Shares") at the Option Price of $ per share, in accordance with the
Stock Option Agreement dated as of , 19 , evidencing the grant to me of an
Option on that date.

I hereby elect to pay for the Shares as follows (check method(s)):

[_]in cash; I enclose herewith my check to the order of UGI Corporation
in the amount of $ ;

[_]by surrender of shares of UGI Common Stock owned by me for more
than one year prior to the date of exercise; I hereby deliver my
stock certificate(s), numbered , , and , together with
stock powers duly executed by me, in accordance with Section 4 of
the Stock Option Agreement, in payment for the Shares;

[_]by surrender of credits of Dividend Equivalents accrued under the
Plan and applicable toward payment of the Option Price, in the
amount of $ and/or

[_]by payment through the following broker _____________________________

Address _____________________________

Telephone ___________________________

This notice of exercise shall be valid only if the tendered consideration is
sufficient to pay the entire Option Price for the purchase of the Shares.

I hereby agree to remit to UGI payment in cash of the full amount of any
federal, state and local withholding taxes due in connection with my exercise
of the Option.

COMPLETE SECTION A OR SECTION B AS APPLICABLE AND SIGN SECTION C BELOW:

A. Certificates to be registered as follows:

NAME(S) SOCIAL SECURITY NUMBER(S) NUMBER OF SHARES
------- ------------------------- ----------------

------------------------------------------------------------------------

------------------------------------------------------------------------
------------------------------------------------------------------------

B. I hereby authorize the Company to issue certificates or effect a book entry
to:

____________________________________________________________________________

DTC Participant No. ________________________________________________________

COMPANY TO COMPLETE THE FOLLOWING:

Received by:

UGI Corporation

By: _________________________________ _____________________________________
Name: (Date)
Title:

Fair Market Value of UGI Common Stock on date received: $ .

* * * *

C. Signature:

_____________________________________
(Signature of Employee)

_____________________________________
(Street address)

_____________________________________
(City) (State) (Zip)

_____________________________________
(Date)

A-2

PROXY PROXY

UGI CORPORATION

Proxy Solicited by the Board of Directors

The undersigned hereby appoints Robert C. Forney, James W. Stratton and Lon R.
Greenberg, or any of them, with full power of substitution, as proxies to
represent and vote all shares of UGI Common Stock of the undersigned, including
any shares credited under the UGI Dividend Reinvestment Plan, at the Annual
Meeting of Shareholders of UGI Corporation to be held February 25, 1997, and any
adjournments thereof, as hereinafter specified and, in their discretion, upon
such other matters as may properly come before the meeting.

THIS PROXY WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED. ON
MATTERS FOR WHICH YOU DO NOT SPECIFY A CHOICE, YOUR SHARES WILL BE VOTED IN
ACCORDANCE WITH THE RECOMMENDATION OF THE BOARD OF DIRECTORS.

(Continued and to be signed on reverse side)

. FOLD AND DETACH HERE .

Annex C Please mark [X]
your votes as
indicated in
this example

The Board of Directors recommends that you vote "FOR" Numbers 1,2,3 and 4.

1. ELECTION OF DIRECTORS J.W. Stratton, R.C. Forney, D.I.J. Wang
R.C. Gozon, C.H. Holley, Q.I. Smith, Jr.,
FOR WITHHOLD S.D. Ban, A. Pol and L.R. Greenberg.
all nominees AUTHORITY
(except as noted) (all nominees) (INSTRUCTION: To withhold authority to
vote for any individual nominee, strike
[_] [_] a line through the nominee's name in the
list above.)

2. APPROVAL OF UGI CORPORATION 3. APPROVAL OF UGI CORPORATION 1997 STOCK
DIRECTORS' EQUITY COMPENSATION PLAN. OPTION AND DIVIDEND EQUIVALENT PLAN.

FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
[_] [_] [_] [_] [_] [_]

4. APPROVAL OF APPOINTMENT OF COOPERS & LYBRAND
L.L.P. AS INDEPENDENT PUBLIC ACCOUNTANTS.

FOR AGAINST ABSTAIN
[_] [_] [_]

When shares are held by joint tenants,
both should sign. When signing as
attorney, executor, administrator,
trustee, or guardian, please give full
title as such. If a corporation, please
sign the full corporate name by duly
authorized officer.

-----------------------------------------
Signature(s)

Dated
------------------------------------

................................................................................
FOLD AND DETACH HERE

[LOGO OF UGI CORPORATION APPEARS HERE]

Dear Shareholder:

Enclosed are materials relating to UGI Corporation's 1997 Annual Meeting
of Shareholders. The Notice of the Meeting and Proxy Statement describe the
formal business to be transacted at the meeting.

Your vote is important to us. Please complete, sign and return the
attached proxy card in the accompanying postage-paid envelope whether or not you
expect to attend the meeting.

Barton D. Whitman
Corporate Secretary

- - --------------------------------------------------------------------------------
UGI NEWS & REPORTS You can obtain news and other
-------------------- information about UGI and our
24 Hours a day -- Every day! majority-owned AmeriGas Partners, L.P.
1-800-UGI-9453 Or conveniently by telephone or
http://www.shareholder.com/ugi/ by the Internet.
- - --------------------------------------------------------------------------------