SECOND AMNDMENT
                                 ---------------
                                     OF THE
                                     ------
                           INTERIM OPERATING AGREEMENT
                           ---------------------------


     This  Second  Amendment  of  the  Interim Operating Agreement (this "Second
Amendment")  is  made  and  entered into effective as of the __ day of December,
1998,  by  and  among Wilson Technologies Incorporated, a California corporation
("WTI"),  a  wholly-owned  subsidiary  of  Zimmerman Holding, Inc., a California
corporation  ("ZHI"),  and  ZHI,  on  the  one  hand,  and  Wilson  Acquisition
Corporation,  a  Delaware corporation ("WAC"), a wholly-owned subsidiary of Penn
Octane  Corporation, a Delaware corporation ("POC"), and POC, on the other hand.

     A. The  above-named  parties to this Second  Amendment (the  "Parties") are
parties to that certain Amendment of the Interim Operating Agreement dated as of
March 21, 1997 (the "First Amendment").

     B. Pursuant to the First Amendment, the Parties terminated (i) that certain
Purchase Agreement dated March 7, 1997 among the Parties,  and (ii) that certain
Interim Operating Agreement dated March 7, 1997 among the Parties, except to the
extent set forth in the First  Amendment  and in  Paragraph  15 of the  Purchase
Agreement.

     C. Pursuant to Section 1 of the First  Amendment WTI was to receive $xxxxxx
in the form of a note payable 20% per year with  interest at the prime rate with
the first  payment  due June 5, 1998 (the  "Note  Payments"),  and  pursuant  to
Section 6 of the First Amendment,  WTI was to receive  royalties as set forth in
such Section 6 (the "Royalty Payments").

     D. The Parties desire to further amend the First  Amendment and the Interim
Operating  Agreement and to resolve all payment  obligations between the Parties
in connection with the Note Payments and the Royalty Payments.


                                    AGREEMENT
                                    ---------

     THEREFORE,  in  consideration  of the Recitals and the mutual covenants and
agreements  contained  herein,  and contingent  upon ZHI's timely receipt of the
"Stock" has  hereinafter  defined,  it is agreed by and between the Parties that
the First Amendment and the Interim Operating Agreement,  and further amended as
follows:

     1. Modifications of First Amendment. Within ten (10) business day after the
        --------------------------------
execution of this Second Amendment, WAC and POC shall deliver to ZHI 53,884 Rule
144 Shares of POC common  stock  issued in the name of ZHI (the  "Stock")  which
shall be  accepted  by ZHI and WTI in the full  satisfaction  and payment of the
following:

          (a) The Note  Payments  now due or payable in the  future,  so that no
     further payments shall be due or payable by WAC and/or POC and Section 1 of
                      -----
     the First Amendment is modified to such extent; and

<PAGE>
          (b) The  Royalty  Payments  now due or  payable  in the  future by WAC
     and/or POC after giving  effect and taking into  consideration  any and all
     offsets to such  Royalty  Payments  made  through  the date of this  Second
     Amendment,  so that no further payments shall be due or payable and Section
     6 of the First Amendment is modified to such extent.

     It is  acknowledged  by the Parties  that upon receipt of the Stock by ZHI,
     the note Payments and the Royalty Payments will be deemed satisfied and pay
     in full and WAC an/or POC shall not have any obligation to make any further
     payments in connection with either the Note Payment or the Royalty Payments
     and WAC  and/or  POC are not  required  to make  any  further  payments  in
     connection with any agreement described herein. It is further  acknowledged
     that the  determining  the amount of the Stock the Parties  have taken into
     account the offsets made against the Royalty Payment up to the date of this
     Second  Amendment as set forth in Section 6 of the First Amendment and that
     no payment or  reimbursement  for such offset shall be required because the
     amount of the Stock is based upon the  amounts  due under the Note  Payment
     and the net amount currently due and payable under the Royalty Payment. The
     Parties  agree that,  upon the  execution of this Second  Amendment by both
     Parties,  neither Party has any obligation to make any further  payments to
     the other Party.

     2. Miscellaneous.
        -------------

          2.1 Attorneys'  Fees. If any legal action or any  arbitration or other
              -----------------
proceeding is brought for the enforcement of this Second  Amendment,  or because
of an alleged dispute,  breach,  default or misrepresentation in connection with
any of the  provisions of this Second  Amendment,  the  successful or prevailing
Party shall be entitled to recover  reasonable  attorneys'  fees and other costs
incurred in that action or proceeding,  in addition to any other relief to which
the Party may be entitled.

          2.2 Successors and Assigns.  This Second Amendment shall be binding on
              ----------------------
and shall  inure to the benefit of the heirs,  administrators,  representatives,
executors, successors and assigns of the Parties.

          2.3 Time is of the Essence.  Time is of the essence in the performance
              ----------------------
of each and  every  obligations  to be  performed  by the  Parties  as set forth
herein.

          2.4 Choice of Law.  This  Second  Amendment  shall be  governed by and
              -------------
construed in accordance with the laws of the State of California (without regard
to conflicts of law principles).

          2.5  Headings.  The  subject  headings  of the  Section of this Second
               --------
Amendment are included for purposes of convenience only and shall not affect the
construction or interpretation of any of this Second Amendment's provisions.

                                        2
<PAGE>
          2.6 Amendment.  This Second Amendment shall not be amended or modified
              ---------
in any way without the written consent of all the Parties.

          2.7 Counterparts.  This Second Amendment may be executed in any number
              ------------
of  counterparts,  each of which shall be deemed an  original,  but all of which
shall together constitute a single agreement.

     IN  WITNESS  WHEREOF,  the  Parties have caused this Second Amendment to be
executed  effective  as  of  the  date  first  set  forth  above.


                          WAC
                          ---

                          WILSON ACQUISITION CORPORATION, a Delaware corporation


                          By:


                          Title:



                          POC
                          ---

                          PENN  OCTANE  CORPORATION,
                          A  Delaware  corporation


                          By:


                          Title:



                          WTI
                          ---

                          WILSON  TECHNOLOGIES  INCORPORATED,  a
                          California  corporation


                          By:


                          Title:

[Signatures  continued  on  next  page]

                                        3
<PAGE>


                          ZHI
                          ---

                          ZIMMERMAN  HOLDINGS,  INC.,  a
                          California  corporation


                          By:


                          Title:

                                        4
<PAGE>