PROMISSORY  NOTE
                                ----------------



$995,000.00                                                New  York,  New  York
                                                           November  30,  2000



     FOR  VALUE RECEIVED, Western Wood Equipment Corporation (Hong Kong), a Hong
Kong  corporation  with  its  principal  address  at  20/F  Tung  Way Commercial
Building,  Wanchai,  Hong  Kong  (the "Borrower"), hereby promises to pay to the
order  of Penn Octane Corporation, a Delaware corporation (the "Lender"), at its
offices  located at 77-530 Enfield Lane, Bldg. D, Palm Desert, California 92211,
or  at  such  other place as the Lender shall designate, the principal amount of
Nine  Hundred  and Ninety Five Thousand Dollars ($995,000.00) on April 30, 2001.
The  Borrower  shall pay interest on the unpaid principal amount hereof from the
date  hereof until paid, at a rate of ten percent (10.50%) per annum, to be paid
in  arrears  on  April  30,  2001.

     Should  the  indebtedness  represented  by this Promissory Note or any part
thereof be collected at law or in equity or in bankruptcy, receivership or other
similar  court  proceedings  or  this  Promissory Note be placed in the hands of
attorneys  for collection before or after maturity, the Borrower, its successors
and  assigns,  agree  to  pay, in addition to the principal and interest due and
payable  hereon,  reasonable  attorneys'  and  collection  fees.

     If  the  Borrower shall fail to make payment of any installment of interest
on this Promissory  Note  when due,  and if such default is not cured within ten


<PAGE>
(10) days thereafter, or  if  the Borrower shall become insolvent or a voluntary
or uncontroverted petition shall be  filed  under the Federal Bankruptcy Code or
other  similar  Federal or state law dealing with arrangements for the relief of
creditors  with  respect  to the Borrower (in each case, an "Event of Default"),
and  in  any  such  event, the holder shall have the right without notice to the
Borrower  to  declare  this  Promissory  Note with accrued interest hereon to be
immediately  due  and  payable  (whether  or  not  then  due by the stated terms
hereof),  whereupon  the  same  shall  become and be immediately due and payable
without  presentment,  demand,  protest  or notice of any kind, all of which are
hereby  expressly  waived  by  the  Borrower.

     This  Note  is  secured  by  and  entitled  to the benefits of a Pledge and
Security  Agreement  dated  the  date  hereof  pursuant  to  which  Borrower's
obligations  hereunder  are secured by five hundred thousand (500,000) shares of
Common  Stock,  $0.01  par  value,  of  the  Lender  owned  by  Borrower.

     No  waiver  by  the  holder  of  any breach of any covenant of the Borrower
herein  contained or any term or condition hereof shall be construed as a waiver
of any subsequent breach of the same or of any other covenant, term or condition
herein.

     This  Promissory  Note  shall be deemed to have been made under, and in all
respects  shall be governed by and construed in accordance with, the laws of the
State  of  New  York.

          _____________________________________
          Western  Wood  Equipment  Corporation


<PAGE>
                          PLEDGE AND SECURITY AGREEMENT


     PLEDGE  AND  SECURITY  AGREEMENT  dated  as  of  November 30, 2000, made by
Western  Wood  Equipment  Corporation  ("Borrower")  in  favor  of  Penn  Octane
Corporation,  a Delaware corporation (the "Corporation"), for the benefit of the
Corporation.


                              W I T N E S S E T H :
                              ---------------------


     WHEREAS,  in  connection  with  the  exercise  by  Borrower  of warrants to
purchase  500,000  shares  of  Common Stock, $0.01 par value, of the Corporation
(the  "Common  Stock") for $2.00 per share, the Corporation has agreed to accept
$5,000  in  cash  and  a  promissory note dated the date hereof (the "Promissory
Note")  from  Borrower in the amount of $995,000 bearing interest at the rate of
10.50%  per  annum.  Principal  and  accrued interest is due April 30, 2001, and
subject  to  the  terms  and  conditions  set  forth in the Promissory Note; and

     WHEREAS, Borrower has agreed to grant a security interest in certain shares
of Common Stock owned by Borrower to secure, equally and ratably, the prompt and
complete  payment  when  due  of  all  Borrower's  payment obligations under the
Promissory  Note  (the "Secured Obligations") and the performance and observance
by  Borrower  of  the  covenants, obligations and conditions to be performed and
observed  by  Borrower  pursuant  to  the  Promissory  Note;

     NOW,  THEREFORE, in consideration of the premises and the mutual agreements
set  forth  herein,  the  parties  hereto  agree  as  follows:

1.   Definitions.
     ------------

     (a)     The  words  "hereof," "herein" and "hereunder" and words of similar
import,  when  used  in this Agreement, shall refer to this Agreement as a whole
and  not  to  any particular provision of this Agreement, and section references
are  to  this  Agreement,  unless  otherwise  specified.

     (b)     Unless otherwise defined herein, all terms defined in Article 8 and
9 of the Uniform Commercial Code in effect as of the date hereof in the State of
New  York  (the  "Uniform  Commercial Code") are used herein as therein defined.

2.   Grant  of  Security  Interest.
     ------------------------------

     (a)     To  secure  the prompt and complete payment when due to all Secured
Obligations,  now  existing  or  hereafter  arising,  and  the  performance  and
observance  by  Borrower  of  the  covenants,  obligations  and conditions to be
performed  and  observed  by  Borrower pursuant to the Promissory Note, Borrower
hereby  assigns  and  pledges to the Corporation and grants to the Corporation a
continuing  security  interest in all of its right, title and interest in and to


<PAGE>
five  hundred thousand (500,000) shares of Common Stock of the Corporation owned
by Borrower (the "Pledged Stock") and the certificates representing such Pledged
Stock,  and  all  dividends, cash rights, instruments and other property and all
proceeds of every kind thereof (whether the same are now owned or exist or arise
or  are  acquired  before  or after the date hereof) from time to time received,
receivable or otherwise distributed in respect of or in exchange for, any or all
of the Pledged Stock (whether the same are now owned or exist or arise before or
after  the  date hereof) (the Pledged Stock together with all such certificates,
dividends,  cash,  rights, instruments, property and proceeds, being hereinafter
referred  to  as  the  "Pledged  Stock  Collateral").

     (b)     Borrower hereby delivers to the Corporation, duly endorsed in blank
or  accompanied  by appropriate undated stock powers duly executed in blank, all
certificates  or  instruments  representing  or  evidencing  the  Pledged Stock.

3.   Stock  Dividends,  Distributions,  Etc.  If,  while  this  Agreement  is in
     --------------------------------------
effect,  Borrower  shall  become entitled to receive or shall receive any stock,
any  stock  certificate  representing  same,  options,  rights or other Property
(including, without limitation, any certificate representing a stock dividend or
any  distribution  in  connection  with any re-capitalization, reclassification,
increase  or  reduction  of  capital,  or  issued  in  connection  with  any
reorganization), whether as an additional to, in substitution of, or in exchange
for, any shares of any Pledged Stock Collateral, or otherwise, or any payment or
distribution  of  capital  on  account of any Pledged Stock Collateral, Borrower
agrees  to  accept  the  same as the Corporation's agent and to hold the same in
trust  on  behalf  of  and for the benefit of the Corporation and to deliver the
same  to  the  Corporation  on  or  before  the  close of business on the second
Business  Day  following  the  receipt  thereof  by  Borrower, in the exact form
received, with the endorsement of Borrower when necessary or appropriate undated
stock  powers  duly executed in blank, to be held by the Corporation, subject to
the terms of this Agreement, as additional Pledged Stock Collateral and any cash
distribution  in  connection  therewith  or  cash  proceeds  therefrom  shall be
deposited by the Corporation in a segregated account for Borrower (the "Borrower
Collateral  Account"),  and  thereafter  disposed  of  in  accordance  with this
Agreement.

4.   Cash  Dividends;  Voting  Rights.  Unless  Borrower  is  in  default of his
     --------------------------------
payment  obligations  under  the  Promissory  Note for a period of ten (10) days
after  written  notice  from  the Corporation of such default, Borrower shall be
entitled,  except  as  otherwise  provided  in  Section  3,  to receive all cash
distributions and cash dividends in respect of the Pledged Stock and to exercise
all  voting  and  other  consensual  rights  pertaining  to  the  Pledged Stock.
Borrower  agrees to exercise all such voting and other consensual rights for the
purpose  not inconsistent with or voilative of the terms of this Agreement.  The
Corporation  shall  not have the right at any time to exercise any voting rights
with  respect  to  the  Pledged  Stock; provided, however, that upon the sale or
other disposition of the Corporation's interest in the Pledged Stock or any part
thereof,  any  third party purchaser or other transferee shall have the full and
unrestricted  right  to  vote  the  Pledged  stock,  in  any manner permitted by
applicable  law.


                                        2
<PAGE>
5.   Proxies,  Etc.  The  Corporation  shall execute and deliver (or cause to be
     --------------
executed  and  delivered)  to Borrower all such proxies and other instruments as
Borrower  may  be  reasonable  request  for  the purpose of enabling Borrower to
exercise  the  voting  or  other  rights  which Borrower is entitled to exercise
pursuant  to  Section 4 hereof and to receive all distributions and dividends he
is  authorized  to  receive  and  retain  pursuant  to  Section  4  hereof.

6.   Financing  Statement.  Borrower  hereby  agrees  to execute  such financing
     ---------------------
statements  as  the  Corporation may request, from time to time, with respect to
the Pledged Stock Collateral, and take such action as may be required to perfect
and keep perfected the security interest in the Pledged Stock Collateral created
hereby,  and  Borrower  hereby  authorizes  the  Corporation  to  execute as its
attorney  in  fact  and file any such financing statements on Borrower's behalf.

7.   Rights  of  the  Corporation.  If  Borrower  is in  default  of his payment
     -----------------------------
obligations  under  the  Promissory  Note and such default is not cured within a
period  of  ten (10) days thereafter, or if Borrower shall become insolvent or a
voluntary  or  uncontroverted  involuntary  petition  shall  be  filed under the
Federal  Bankruptcy  Code  or  other  similar  Federal or state law dealing with
arrangements for the relief of creditors with respect to Borrower (in each case,
an  "Event  of  Default"),  Borrower shall not longer be entitled to receive any
cash  dividends  or distributions in respect of the Pledged Stock or to exercise
any  voting  rights, rights of conversion, exchange or subscription or any other
rights,  privileges  or  options  pertaining to any shares of the Pledged Stock;
and,  upon  the  sale  or other disposition of the Corporation's interest in the
Pledged Stock or any part thereof, any third party purchaser or other transferee
shall  have the full and unrestricted right to exercise any and all such rights,
privileges  or  options.

8.   Remedies.
     ---------

     (a)     If  there  shall have occurred an Event of Default, the Corporation
may  at  any  time or from time to time exercise in respect of the Pledged Stock
Collateral, in addition to all other rights, powers and remedies provided for in
Section  7,  at  law, in equity or otherwise available to it, all the rights and
remedies  of  a  secured  party  under the uniform Commercial Code and under any
other  applicable  law  as  in  effect  in  any  relevant  jurisdiction  and, in
connection therewith but not in limitation thereof, the Corporation may, without
demand  for  performance  or  other  demand, advertisement or notice of any kind
(except  the  notice specified below of time and place of public or private sale
or  other  disposition)  to  Borrower or any other Person (all and each of which
demands,  advertisement  and notices are hereby expressly waived), sell, assign,
grant an option or options to purchase or otherwise dispose of the Pledged Stock
Collateral  or any part thereof in one or more parcels at public or private sale
or sales, at any exchange, broker's board or at any of the corporation's offices
or  elsewhere  and at such prices as the Corporation may deem best, for cash, or
credit  or  for future delivery, without assumption any credit risk, free of any
claim  or right of whatsoever kind (including any right or equity of redemption)
of  Borrower,  which  claim,  right  and  equity are hereby expressly waived and
released,  and  upon such other terms and conditions as the Corporation may deem
commercially  reasonable, provided, however, that Borrower shall not be credited
                          -----------------
with  the net proceeds of any such credit sale or future delivery until the cash
proceeds thereof are actually received by the Corporation and are applied to the
Secured  Obligations  until  satisfied.


                                        3
<PAGE>
     (b)     Borrower  agrees  that,  to  the  extent  notice  of  sale or other
disposition  shall be required by applicable law, at least ten (10) days' notice
to Borrower of the time and place of any public sale or other disposition or the
time  after  which  any  private sale or other intended disposition may be made.
Notice  shall constitute reasonable notification thereof.  Notification need not
be given to Borrower if it has signed, after an Event of Default has occurred, a
statement  renouncing  any  right  to  notification  of  sale  or other intended
disposition.  The  Corporation  shall not be obligated to make any sale or other
disposition  of  Pledged  Stock  regardless  of  notice  having  been  given.

     (c)     The  Corporation  may  adjourn  any public or private sale or other
disposition  from  time  to  time  by  announcement  at the time and place fixed
therefore,  and  such sales or other disposition may, without further notice, be
made  at the time and place to which it was so adjourned.  The Corporation shall
have  the  right  upon any such public sales or other disposition, to the extent
permitted  by  applicable  law, to purchase the whole or any part of the Pledged
Stock  Collateral  so sold or disposed of.  Any and all proceeds received by the
Corporation  in respect part of the Pledged Stock, whether consisting of moneys,
checks,  notes,  drafts,  bills of exchange, money orders or commercial paper of
any  kind  whatsoever,  shall  be  deposited  by the Corporation in the Borrower
Collateral  Account  and  shall  be held by the Corporation, to be withdrawn and
distributed  by  the  Corporation  as  provided  herein.

     (d)     The  rights  and  remedies  provided  under  this  Agreement  are
cumulative  and  may be exercised singly or concurrently, and are note exclusive
of  any  rights  and  remedies  provided  by  law  or  equity.

     (e)     Borrower  recognizes that the Corporation may be unable to effect a
public  sales  of  all  or  a  part of the Pledged Stock Collateral by reason of
certain  prohibitions  contained  in  the Securities Act of 1933, as amended, or
other  federal  securities laws, as now or hereafter in effect, or in applicable
Blue  Sky or other state securities laws, as now or hereafter in effect, but may
be  compelled  to  resort  one  or  more  private sales to a restricted group or
purchasers  who  own  account,  for  investment  and  not  with  a  view  to the
distributions or resale thereof.  Borrower agrees that private sales so made may
be  at prices and one other terms less favorable to the Corporation than if such
Pledged Stock Collateral were sold at public sales, and that the Corporation has
no  obligation  to delay sale of any such Pledged Stock Collateral of the period
of  time  necessary  to permit the registration of such Pledged Stock Collateral
for  the  period  of  time  necessary to permit the registration of such Pledged
Stock  Collateral  for  public  sales  under  such  applicable  securities laws.
Borrower  agrees that private sales made under the foregoing circumstances shall
be  deemed  to  have  been  made  in  a  commercially  reasonable  manner.

     (f)     If  the Corporation determines to exercise its right to sell all or
any  of  the  Collateral, upon written request, Borrower shall from time to time
furnish  to  the Corporation all such information as the Corporation may request
in  order  to  determine  the Collateral which may be sold by Borrower as exempt
transactions  under  the  federal  securities  laws.

     (g)     The  proceeds  of  the  sale of any of the Pledged Stock Collateral
sold  pursuant  to  the Section 8 and cash constituting Pledged Stock Collateral
received  under  Section  2(a)  shall  be applied to the Corporation as follows:


                                        4
<PAGE>
          FIRST:     to  the  payment  of  the costs and expenses of such sales,
          ------
including  out-of-pocket  expenses  of  the  Corporation  and  the  fees  and
out-of-pocket  expenses  of  legal  advisers  employed  by  the  Corporation  in
connection therewith, and to the payment of all advances made by the Corporation
hereunder  and  payment of all costs and expenses incurred by the Corporation in
connection  with  the  administration  and  enforcement  of  this  Agreement:

          SECOND:     to  the  payment  in  full  of  the  Promissory  Note: and
          -------

          THIRD:     the  balance  (if  any)  of  such proceeds to Borrower, the
          ------
successors  or  assigns of Borrower, or as a court of competent jurisdiction may
direct.

9.   Representations:  No  Disposition,  Etc.  Borrower  hereby  represents  and
     ----------------------------------------
warrants  that  it now owns good and marketable title to the Pledged Stock, free
and  clear of any liens, charges, encumbrances or security interests of any kind
whatsoever,  and  that  the  Pledge  Stock  is not subject to any restriction on
alienation  or  transfer,  in  each  case,  other  than this Agreement, Borrower
covenants  to defend the right, title and special property of Borrower in and to
the  Pledged  Stock  against  the  claims and demands of all persons whatsoever.
Borrower  hereby  represents, warrants and covenants that Borrower is currently,
or shall be, the only owner of the Pledged Stock and that Borrower does not, and
will not have, outstanding rights, options, warrants, conversion rights or other
commitments  or agreements for the purchase or acquisition of the Pledged Stock.
Borrower  agrees that he will not sell, assign, transfer, exchange, or otherwise
dispose  of,  or  grant  any  option or right with respect to, the Pledged Stock
Collateral,  nor  will  it  create,  incur or permit to exist any lien, security
interest therein, change or encumbrance with respect to any of the Pledged Stock
Collateral,  any  interest,  or any proceeds thereof except as permitted by this
Agreement.

10.   Possession  of  the  Collateral.  The  Corporation  shall  hold  in  its
      --------------------------------
possession  in  the  State  of  California  all  the Pledged Stock and all other
certificates,  documents  or  instruments  constituting Pledged Stock Collateral
pledged,  assigned to transferred hereunder except as form time to time any such
certificate,  document  or instrument may be required for recordation or for the
purchase  of enforcing or realizing upon any right or value thereby represented;
provided,  however,  that  Borrower  in  his  capacity  as  an  officer  of  the
Corporation  or otherwise, shall have no ability to assign, release, transfer or
otherwise  deal  with  the  Pledged Stock Collateral.  The Corporation may, from
time  to  time,  in  its  sole discretion appoint one or more agents or trustees
(which  in  no case shall be Borrower or any of his affiliates) to hold physical
custody,  for  the  account of the Corporation, of any or all such certificates,
documents  or  instruments.

11.  Collateral  Agreement.  Each  of  Borrower  and the Corporation agrees that
     ----------------------
the  parties  hereto  may  supplement, amend or superseded this Agreement with a
collateral  agreement among the Corporation, Borrower and a third party bank, as
trustee,  pursuant  to  which  such  third  party bank shall accept and maintain
possession  of  the  Pledged  Stock  Collateral  until  such time as the Secured
Obligations  shall  have  been  satisfied.

12.  Further  Assurance.  Borrower  agrees  that  at any time and from time upon
     ------------------
the  written  request of the Corporation, Borrower will execute and deliver such
further  documents,  including a collateral agreement appointing a trustee other
than  the  Corporation and necessary financing statements, and do or cause to be
done  such  further acts and things as the Corporation may be reasonable request
in  order  to  effect  the  purposes  of  this  Agreement.


                                        5
<PAGE>
13.  Release  of  Security  Interest.  Upon  termination  of  this  Agreement
     --------------------------------
pursuant  to  Section  17  hereof,  the  security  interest granted hereby shall
terminate.  Upon  any  such  termination,  the  Corporation  will, at Borrower's
expense,  execute  and  deliver  to  Borrower  such  documents as Borrower shall
reasonably  request  to  evidence such termination including without limitation,
duly  executed  Uniform  Commercial  Code  termination  statement.

14.  Limitation  by  Law;  Severability.
     -----------------------------------

     (a)     All  rights,  remedies  and power provided in this Agreement may be
exercised  only  to  the  extent  that the exercise thereof does not violate any
applicable  provision  of  law,  and  all  the  provisions of this Agreement are
intended  to  be subject to all applicable mandatory provisions of law which may
be  controlling  and to be limited to the extent necessary so that they will not
render  this  Agreement illegal, invalid, unenforceable, in whole or in part, or
not  entitled  to  be recorded, registered, or filed under the provisions of any
applicable  law.

     (b)     Any  provision  of  this  Agreement  which  is  prohibited  or
unenforceable  in any jurisdiction shall not invalidate the remaining provisions
hereof,  and  any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.

15.  Waivers,  Amendments.  None  of  the  terms or provisions of this Agreement
     ---------------------
may  be  waived,  altered,  modified  or  amended by any act, delay, omission or
otherwise, except by an instrument in writing which is duly executed by Borrower
and  the  Corporation.  Any  such  waiver, alteration, modification or amendment
shall  be  valid  only  to  the  extent  therein  set  forth.  A  waiver  by the
Corporation  of  any  right  or  remedy under this Agreement on any one occasion
shall  not  be  construed  as  a  bar  to  any right, remedy or power, which the
Corporation would otherwise have on any future occasion.  No failure to exercise
not any delay in exercising on the part of the corporation, any right, remedy or
power  under  this  Agreement,  shall  operate  as a waiver thereof; further, no
single  or  partial  exercise of any right, remedy or power under this Agreement
shall  preclude  any  other  or  further exercise thereof or the exercise of any
other  right,  remedy  or  power.

16.  Binding  Effect; Successor and Assigns.  This  Agreement  shall  be binding
     ---------------------------------------
upon  and  inure  to  the  benefit  of the parties hereto and shall inure to the
benefit  of  the  Corporation  its  successors and assigns and nothing herein is
intended  or  shall  be  construed to give any other Person any right, remedy or
claim under, to or in respect of this Agreement or any Pledged Stock Collateral.

17.  Termination  of  This  Agreement.  This  Agreement  shall  terminate
     ---------------------------------
simultaneously  with the payment in full of all principal and interest due under
the  Promissory  Note  and,  upon such termination, any Pledged Stock Collateral
held  hereunder shall be released and delivered to Borrower or at his direction.

18.  Notices.  All  notices  or other  communications  hereunder  shall be given
     --------
in  the  following  manner.


                                        6
<PAGE>
If  to  the  Corporation:

Penn  Octane  Corporation
77-530  Enfield  Lane,  Bldg  D
Palm  Desert,  California  92211
Attention:  Chief  Financial  Officer


If  to  Borrower:

Western  Wood  Equipment  Corporation  (Hong  Kong)
20/F  Tung  Way  Commercial  Building
Wanchai,  Hong  Kong

     Any  of  the  addresses set forth above may be changed from time to time by
written  notice  from  the  party  requesting  the  change.

19.  Applicable  Law.  This  Agreement  shall  be  governed by, and be construed
     ----------------
and  interpreted  in accordance with, the internal laws of the State of New York
without  reference  to  principles  of  conflict  of laws, except as required by
mandatory  provisions  of  law.


                                        7
<PAGE>
     IN  WITNESS  WHEREOF,  the  parties  hereto have executed this Agreement or
caused this Agreement to be duly executed and delivered by their duly authorized
officers  as  of  the  date  first  above  written.

                                              BORROWER



                                              Western Wood Equipment Corporation



                                              PENN  OCTANE  CORPORATION


                                              By:  _____________________________
                                                   Name:
                                                   Title:


                                        8
<PAGE>