November 28, 2001



FirstName   LastName
Company
Company1
Address1
Address2
City ,  State   Zip

     RE:  AMENDMENT - PROMISSORY  NOTE ("NOTE")  OF PENN OCTANE CORPORATION (THE
          "COMPANY")  CURRENTLY HELD BY YOU WITH A DUE DATE OF DECEMBER 15, 2001
          AND  RELATED  AGREEMENTS  AND  INSTRUMENTS

Dear  Holder  Of  The  Promissory  Notes:

     Reference  is made to the promissory note(s) which is currently held by you
in  connection  with one or more of the following transactions with the Company:

     i.)       The  promissory  note(s)  originally  issued  by  the  Company in
               connection  with  the private placement on or around December 17,
               1999  (the  "Original  Notes"),  as  amended  (the  "Restructured
               Notes"),
     ii.)      The  promissory  note(s)  originally  issued  by  the  Company
               contemporaneously  with  the  issuance of the Original Notes (the
               "Original  Other  Notes"),  as  amended  (the "Other Restructured
               Notes"),  and/or
     iii.)     The  promissory  note(s)  originally  issued  by  the  Company
               contemporaneously  with  the  restructuring of the Original Notes
               and  the  Original  Other  Notes  (the  "New  Notes").

     The  Restructured Notes, the Other Restructured Notes and the New Notes are
     collectively  referred  to  as  the  "Promissory  Notes"  and  all  of  the
     underlying  agreements  pertaining  to  the Promissory Notes, including the
     purchase  agreement,  the note agreement, the common stock purchase warrant
     agreement,  the  registration rights agreement, and all related amendments,
     if  any,  are  collectively  referred  to  as  the  "Original  Documents".

     The  Promissory  Notes,  including  unpaid  interest are due and payable on
December  15,  2001.  The Company is in the position to satisfy the December 15,
2001  payment date. However, the Company would prefer to extend the payment date
of the Promissory Notes instead of liquidating assets.  Therefore the Company is
willing  to  extend  the payment due date on the Promissory Notes until June 15,
2002, continue interest payments on the Promissory Notes at a rate of 16.50% per
annum,  pay  you  a  1%  fee  and  modify your common stock purchase warrants by
extension  of  the  expiration  date  until December 15, 2004 and removal of the
Company's  repurchase  right  with  regards  to  the  warrants.


<PAGE>
     For  good  and valuable consideration, the receipt and sufficiency of which
are  hereby  acknowledged,  the  Company and you hereby agree that your Original
Documents  shall  be, and hereby are, amended, effective from and after December
15,  2001,  to  the  fullest  extent  necessary  to  effectuate  the  following:

     1.   Promissory  Notes. The Promissory Notes held by you are hereby amended
          -----------------
          to  the  full  extent  necessary  to  effectuate  the  following:

                    (a)  Extend the payment due date from "December 15, 2001" to
                         "June  15,  2002".
                    (b)  Pay  interest  on  the  Promissory Notes at the rate of
                         16.50%  per  annum on December 15, 2001, March 15, 2002
                         and  June  15,  2002.
                    (c)  The  interest  rate  of  16.50% per annum, shall not be
                         further  adjusted.

     2.   Common  Stock  Purchase  Warrants.  The Common Stock Purchase Warrants
          ---------------------------------
          held  by  you  are  hereby  amended to the fullest extent necessary to
          effectuate  the  following:

                    (a)  Extend the expiration date of the Common Stock Purchase
                         Warrants  from  "December  15,  2003"  to "December 15,
                         2004".
                    (b)  Remove  the  Company's  repurchase  right.

     3.   Additional Payment. The Company will pay to you a fee equal to 1.0% of
          ------------------
          the  amount  of  your  Promissory Notes which are extended pursuant to
          this  amendment  letter.  The fee will be paid on December 15, 2001 as
          well as any unpaid interest due on the Promissory Notes as of December
          15,  2001  (see  1(b)  above).

     4.   Declining  Noteholders.  Notwithstanding  anything  to  the  contrary
          ----------------------
          contained  in  your  Original Documents, you hereby agree that, to the
          extent  that any other holders of the Promissory Notes do not agree to
          this  amendment  letter  by  December  7,  2001  (collectively,  the
          "Declining  Promissory Noteholders"), the Company shall be entitled to
          repay  such  Declining Promissory Noteholders all amounts owing by the
          Company  to  such  Declining  Promissory  Noteholders  under  their
          respective  Original  Documents without, by virtue thereof, in any way
          breaching  or  otherwise  being  in  default  of  any of your Original
          Documents.  Any  such  amounts  paid,  shall  be  excluded  from  the
          definition  of  "Financing"  provided  for in your Original Documents.


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<PAGE>
     If  you  are  in  agreement with the terms of this amendment letter, please
indicate  so  by  signing  below  and faxing an executed copy to Ian Bothwell at
(760)  772-8588  no  later  than  the  close  of  business  on December 7, 2001.

Very truly yours,

Penn Octane Corporation



By:
    --------------------------------------------
Its:  Vice President and Chief Financial Officer


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<PAGE>
     The  undersigned holder of the Promissory Note and other Original Documents
referred  to  in this amendment letter hereby acknowledges his/her/its agreement
to  all of the provisions of this amendment letter and intention to be so bound.
The  undersigned  also  agrees to keep the contents of this amendment letter and
any documents or discussions regarding the same strictly confidential and not to
use  the  same for any purpose pending public disclosure thereof by the Company;
provided,  however, that the undersigned may consult with his, her or its agents
and  advisors  with  respect  to  the  transactions  contemplated hereby and, in
connection  therewith,  disclose the terms and contents of this amendment letter
and  any  other  documents  relating  to  the  subject matter thereof or hereof.

FirstName   LastName
Company
Company1


By:
    ----------------------------------

Its:
     ---------------------------------

Date:
      --------------------------------

Promissory Note Amount:   $    NoteAmt
                           -----------



Name and Telephone Number of Holder:


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