<PAGE>   1

                                                                   EXHIBIT 10.40

                           PLEDGE AND ESCROW AGREEMENT

         THIS PLEDGE AND ESCROW AGREEMENT (the "Agreement") made and entered
into as of this third day of October, 2000 by and among DENNIS W. HEALEY
(hereinafter referred to as "Pledgor"), Viragen, Inc., a Delaware corporation
(hereinafter referred to as "Pledgee") and ATLAS PEARLMAN P.A. (hereinafter
referred to as "Escrow Agent").

                              W I T N E S S E T H:

         WHEREAS, Dennis W. Healey (the Pledgor referred to in this Agreement)
is the Member of the Board of Directors of Viragen, Inc (the Pledgee referred to
in this Agreement) and entered into a Stock Option Agreement with the Pledgee on
October 6, 1995, a copy of which is attached hereto as Exhibit A;

         WHEREAS, pursuant to such Stock Option Agreement, Pledgor was afforded
the right to acquire 100,000 shares of Common Stock of the Pledgee at $0.50 per
share for an aggregate purchase price of $50,000.

         WHEREAS, the Pledgor has executed a five-year promissory note in the
principal amount of $50,000 (the "Note") in favor of Pledgee for the purchase
price payable in respect to the acquisition of the 100,000 shares of Common
Stock of the Pledgee, a copy of which is attached hereto as Exhibit B;

         WHEREAS, to secure the payment of the Note, Pledgor has agreed to grant
Pledgee a security interest in all 100,000 shares of the Common Stock of the
Pledgee (the "Pledged Shares"); and

         WHEREAS, the Pledgor and the Pledgee have requested the Escrow Agent to
act as escrow agent for the Pledged shares in accordance with the terms of this
Agreement;

         NOW, THEREFORE, in consideration of the premises, covenants and
agreement hereinafter set forth, the parties mutually agree as follows:

         1.       SECURITY INTEREST. Pledgor hereby grants to Pledgee a first
                  lien security interest, superior to all other liens and
                  encumbrances, in and to the Pledged Shares. Copies of stock
                  powers representing the Pledged Shares, endorsed in blank, are
                  attached hereto as Exhibit "C". The Pledged Shares and stock
                  powers shall be held by Escrow Agent as collateral for the
                  indebtedness owed by the Pledgor to Pledgee pursuant to the
                  Note.


<PAGE>   2

         2.       REPRESENTATIONS, WARRANTIES AND COVENANTS. Pledgor hereby
                  represents, warrants and covenants that, except for the
                  security interest granted hereunder, and except that the
                  Pledged Shares are partially paid shares subject to assessment
                  for the balance of the purchase price as represented by the
                  principal amount of the Note, Pledgor is the legal and
                  equitable owner of the Pledged Shares and holds same free and
                  clear of all liens, charges, encumbrances and security
                  interest of every kind and nature, and that Pledgor will make
                  no assignment, pledge, mortgage, hypothecation or transfer of
                  the Pledged Share; that Pledgor has good right and legal
                  authority to pledge the Pledged Shares in the manner hereby
                  done or contemplated and will defend Pledgor's title to the
                  Pledged Shares against the claim of all persons whomsoever;
                  that no consent or approval of any governmental body or
                  regulatory authority, or of any securities exchange, is
                  necessary to the validity of the pledge effected hereby,
                  except for any consents or approvals which have been obtained;
                  that the pledge of the Pledged Shares is effective to vest in
                  Pledgee the rights of the Pledgor in the Pledged shares set
                  forth herein; and that the Pledged Shares have been duly and
                  validly authorized.

         3.       RIGHT TO VOTE. Except as otherwise provided herein, during the
                  term of this Agreement and so long as Pledgor is not in
                  default in the performance of any of the terms of this
                  Agreement or in the payment of principal or interest under the
                  Note, the Pledgor shall be entitled to all rights of
                  ownership, including, but not limited to, the right to vote
                  the Pledged shares on all corporate questions.

         4.       ADJUSTMENTS. In the event that, during the term of this
                  Agreement, any stock dividend shall be declared an or with
                  respect to any of the Pledged Shares, or there is a
                  reclassification, readjustment, merger, consolidation, stack
                  split or any other change is made in the capital structure of
                  the Pledgee which has issued the Pledged Shares or any
                  successor thereto, all new, substituted and additional shares
                  or other securities issued by reason of such a change shall be
                  delivered and held by Escrow Agent under the terms of this
                  Agreement in the same manner as the Pledged Shares.

         5.       DEFAULT. In the event of default by the Pledgor under the
                  Note, in addition to any right or remedy which it may have
                  hereunder, the Pledgee shall have all of the rights and
                  remedies of a secured party under Article 9 of the Uniform
                  Commercial Code as it is now or hereafter in effect in the
                  State of Florida, including without limitation the right to
                  retain or to sell or otherwise dispose at all or any portion
                  of the Pledged Shares. Upon the occurrence of a default under
                  the Note, the Pledgee shall, in its sole discretion, have the
                  right to cancel the Pledged Shares or to offer for sale, and
                  to sell, all or any of the Pledged Shares at any private or
                  public sale; provided, however, that the Pledge shall give to
                  the Pledgor at least ten (10) business days notice of the
                  time, date and place of any such private or public sale, which
                  provision for notice, the Pledgor hereby expressly agrees is
                  commercially reasonable. Furthermore, the Pledgor hereby
                  expressly agrees that the Pledgee may (1) sell all or any
                  portion of the Pledged Shares at any private or public sale
                  for cash, upon credit, or for other property, for immediate or
                  future delivery, and for such price or prices and on such
                  terms as the Pledgee in its sole discretion shall deem
                  appropriate, (ii) bid on and purchase the Pledged Shares at
                  any private or public sale, and (iii) hold any of the Pledged
                  shares purchased by the Pledgee at any private or public sale
                  in its own right, free and clear of any and all claims of


                                       2
<PAGE>   3

                  the Pledgor. The Pledgee may, from time to time, upon such
                  default, sell all or any part of the Pledged Shares. The
                  Pledgor hereby appoints Pledgee an its attorney-in-fact to
                  execute such documents and take such action as may be
                  necessary to accomplish the provisions of this Agreement,
                  including, without limiting the generality of the foregoing,
                  the right to ask for, demand, sue for, collect, receive and
                  give acquittance for any and all monies due or to become due
                  with respect to or in connection with any of the Pledged
                  shares, to endorse checks, drafts, orders and other
                  instruments for the payment of money representing any interest
                  or dividend or other distribution with respect to or in
                  connection with the Pledged shares or any part thereof and to
                  give full discharge for the same, to settle, compromise,
                  prosecute or defend any action, claim or proceeding with
                  respect thereto and to sell, assign, endorse, pledge, transfer
                  and make any agreement respecting same, or otherwise deal with
                  the name. Such appointment in irrevocable and coupled with an
                  interest. Unless Pledgee retains the Pledged Shares in full
                  satisfaction or Pledgor's obligations under the Note as
                  provided herein, Pledgee shall apply the proceeds of
                  disposition of the Pledge shares in the manner provided by
                  Florida law. In lieu of any such sale, Pledgee may retain the
                  Pledged Shares in full satisfaction or partial satisfaction of
                  Pledgor's obligations under the Note.

         6.       ESCROW. Pledgor shall deposit with Escrow Agent the Pledged
                  shares, along with the aforesaid stock powers (all of which
                  items shall hereinafter be referred to as the "Pledged
                  Documents" including all stock assignments), to be held in
                  escrow for future delivery as follows:

                  a.       Escrow Agent shall deliver the Pledged Documents to
                           Pledgee within ten (10) business days after receiving
                           an affidavit signed by Pledgee stating that:

                           (i)      Pledgor is in default under the Note and all
                                    periods of time within which to cure such
                                    default have expired;

                           (ii)     Pledgee is accelerating the entire unpaid
                                    balance due under the Note; and

                           (iii)    Pledgee demands delivery of the Pledged
                                    Documents.

                           Pledgee shall simultaneously furnish Pledgor with a
                           copy of such affidavit. If Escrow Agent has not
                           received any protest or objection from Pledgor within
                           ten (10) business days of receipt of such affidavit,
                           the Pledged Documents shall be delivered to the
                           Pledgee. Upon such delivery of the Pledged Documents,
                           Escrow Agent's duties hereunder shall terminate.

                  b.       In the event Escrow Agent has received written
                           instructions signed by both Pledgor and Pledgee
                           notifying Escrow Agent of a sale of a portion of the
                           Pledged, Escrow Agent may release a portion or all of
                           the Pledged Shares, as provided in such written
                           instruction, and if Escrow Agent is designated to be
                           the recipient of the proceeds from the sale of all or
                           a portion of the Pledged Shares, then Escrow Agent
                           shall deliver any such proceeds received in
                           accordance with such written instructions.

                  c.       In the event Escrow Agent has not delivered the
                           Pledged Documents pursuant to subparagraph a. above,
                           then Escrow Agent shall deliver the


                                       3
<PAGE>   4

                           Pledged Documents; to Pledgor within ten (10)
                           business day; after receipt of the original of the
                           Note marked. "Paid in full", accompanied by
                           instructions from Pledgor indicating that the Note
                           has been paid in full and the Pledged documents shall
                           be delivered to Pledgor at the address specified
                           therein. Upon such delivery of the Pledged Documents,
                           Escrow Agent's duties hereunder shall terminate.
                           Pledgee agrees to deliver the Note to Pledgor marked
                           "paid in full", immediately upon satisfaction
                           thereof.

         7.       DISPUTE. It is specifically understood and agreed that should
                  any dispute arise between the parties hereto concerning this
                  Agreement or its construction, or for any other reason, the
                  Escrow Agent in its sole discretion, shall have the right to
                  deposit the Pledged Documents held by it pursuant to this
                  Escrow Agreement and any documents relating thereto that may
                  have been delivered to the Escrow Agent, with the Clerk of the
                  Circuit Court of Broward County, Florida, and notify all
                  parties concerned, and whereupon, all liability hereunder on
                  the part of the Escrow Agent shall fully cease except to the
                  extent of accounting for the Pledged Documents and any other
                  documents that may have been delivered to it.

         8.       INTERPLEADER. In the event the Escrow Agent places the Pledged
                  Documents that have actually been delivered to Escrow Agent in
                  the registry of the Circuit Court in and for Broward County,
                  Florida, and files an action of interpleader naming Pledgor
                  and Pledgee, and other necessary parties, Escrow Agent shall
                  be released and relieved from any and all further obligations
                  and liabilities hereunder or in connection herewith. Pledgor
                  and Pledgee hereby, jointly and severally, indemnify and hold
                  Escrow Agent harmless from any damages or losses arising
                  hereunder or in connection herewith, including, but not
                  limited to, all costs and expenses incurred by Escrow Agent in
                  connection with the filing at such action and reasonable
                  attorneys' teen and costs for Escrow Agent's attorney(s)
                  through and including all appeals.

         9.       NATURE OF ESCROW AGENT'S DUTIES. It is agreed that the duties
                  of Escrow Agent are only such as are herein specifically
                  provided and are purely ministerial in nature. Hence, Escrow
                  Agent shall not be held liable for any matter or thing except
                  for Escrow Agent's gross negligence or willful misconduct.
                  Pledgor and Pledgee shall at all times hereafter, jointly and
                  severally indemnify Escrow Agent and hold Escrow Agent
                  harmless from any claim assorted against it and for any
                  damages, costs, expenses, liability and/or losses sustained by
                  Escrow Agent (except for Escrow Agent's gross negligence or
                  willful misconduct), including, but not limited to, reasonable
                  attorneys' fees and costs for Escrow Agent's attorney(s)
                  through and including all appeals and whether or not
                  litigation is instituted. The obligations and duties of the
                  Escrow Agent are confined to those specifically enumerated in
                  this Agreement. The Escrow Agent shall not be subject to nor
                  be under any obligation to ascertain or construe the terms and
                  conditions of any instrument whether or not now or hereafter
                  deposited with or delivered to the Escrow Agent or referred to
                  in this Agreement. Nor shall the Escrow Agent be obliged to
                  inquire as to the form, execution and sufficiency or validity
                  or any instruments, or to inquire as to the identity,
                  authority or rights of any person executing or delivering the
                  same.

         10.      RETENTION OF LEGAL COUNSEL. It is agreed that Escrow Agent
                  shall have full discretion as to whom it may retain as legal
                  counsel to protect its interests (including retaining itself
                  as a law firm) and same shall not affect or in


                                       4
<PAGE>   5

                  any way prejudice or limit Escrow Agent's entitlement to
                  reasonable attorneys' fees for the services of such attorneys
                  as set forth in this Escrow Agreement.

         11.      VENUE. It is recognized that this Escrow Agreement shall be
                  deemed to have been entered into by the parties hereto in
                  Broward County, Florida, and that the property which is the
                  subject of thin Escrow Agreement is located in Broward County,
                  Florida. Therefore, it is agreed that venue with respect to
                  any matter arising herefrom shall only lie in Broward County,
                  Florida, except to the extent, and only to the extent, that
                  this provision with respect to venue is deemed in
                  contravention of any applicable law.

         12.      AMBIGUITY: CONFLICTING INSTRUCTIONS. In the event the Escrow
                  Agent shall be uncertain as to its duties or rights hereunder
                  or shall receive instructions, claims or demands from any of
                  the parties hereto or from third persons with respect to the
                  Pledged documents held hereunder, which in its sole opinion,
                  are in conflict with any provision of this Agreement, it shall
                  be entitled to refrain from taking any action until it shall
                  be directed otherwise in writing by all the parties hereto and
                  said third persons, if any, or by a final order or judgment of
                  a court of competent jurisdiction.

         13.      NOTICES. Notices and deliveries under this Agreement shall be
                  given or made by certified mail, return receipt requested, as
                  follows:

                  PLEDGOR:

                  DENNIS W. HEALEY
                  1920 Augusta Terrace
                  Coral Springs, FL 33071

                  PLEDGEE:

                  VIRAGEN, INC.
                  865 SW 78th Avenue
                  Suite 100
                  Plantation, FL 33324

                  ESCROW AGENT:

                  ATLAS PEARLMAN P.A.
                  350 East Las Olas Boulevard
                  Suite 1700
                  Ft. Lauderdale, FL 33301

                  Or such other address as any of the above-mentioned parties
                  shall have designated in writing to the other parties.


                                       5
<PAGE>   6

         14.      TERMINATION. All parties agree that the services of the Escrow
                  Agent may be terminated by the Escrow Agent or by the joinder
                  of both Pledgee and Pledgor upon thirty (30) days written
                  notice to the other. In the event of such termination, the
                  Pledgee and Pledgor shall mutually agree to a Successor Escrow
                  Agent. Failing such mutual agreement, application shall be
                  made to the appropriate court of Broward County, Florida, for
                  the appointment of a Successor Escrow Agent. Upon such
                  appointment, the Escrow Agent shall deliver all Pledged
                  Documents accordance with the terms of this Agreement.

         15.      MISCELLANEOUS.

                  a.       BENEFIT OF AGREEMENT. This Agreement shall be binding
                           upon the parties hereto and their heirs, successors,
                           assigns and personal or legal representatives.

                  b.       MODIFICATION. The Escrow Agent shall not be bound by
                           any modification, cancellation or rescission of this
                           Agreement unless in writing and signed by the parties
                           hereto. In no event, however, shall any modification
                           of this agreement, which shall affect the rights or
                           duties of the Escrow Agent, be binding upon Escrow
                           Agent unless it shall have given its prior written
                           consent.

                  c.       ATTORNEYS' FEES. In the event Pledgor or Pledgee
                           shall seek to enforce this Agreement, whether or not
                           through litigation, the prevailing party shall be
                           entitled to receive reasonable attorneys' fees and
                           all costs incurred in connection with such
                           enforcement, including fees and costs of appeal.

                  d.       FURTHER COOPERATION. From and after the date of this
                           Agreement, each of the parties hereto agrees to
                           execute whatever additional documentation or
                           instruments as are necessary to carry out the intent
                           and purpose of this Agreement.

                  e.       WAIVER. No indulgences extended by any party hereto
                           or any other party shall be construed as a waiver of
                           any breach on the part of such other party, nor shall
                           any waiver of one breach be construed as a waiver of
                           any rights or remedies with respect to any subsequent
                           breach.

                  f.       CONSTRUCTION. It is the intention of the parties that
                           the laws of the State of Florida shall govern the
                           validity of this Agreement, the construction of its
                           terms, and the interpretation of the rights and
                           duties of the parties. The parties agree and
                           acknowledge that each party has reviewed and revised
                           this Agreement and that the normal rule of
                           construction to the effect that any ambiguities are
                           to be resolved against the drafting parties shall not
                           be employed in the interpretation of this Agreement
                           or any amendment or exhibits thereto.

                  g.       TRUTH OF RECITALS. The recitals and statements
                           contained on page 1 of this Agreement are true and
                           correct and are hereby incorporated into this
                           Agreement.

                  h.       ENTIRE AGREEMENT. This Agreement sets forth the
                           entire agreement and understanding of the parties on
                           the subject matter hereof and supersedes all prior
                           agreements and understandings relating thereto.


                                       6
<PAGE>   7

                  i.       SEVERABILITY. The invalidity or unenforceability of
                           any particular provision of this Agreement shall not
                           affect the other provisions hereof and this Agreement
                           shall be construed in all respects as if such invalid
                           or unenforceable provision was omitted.

                  j.       GENDER. Wherever the context shall so require, all
                           words herein in any gender shall be deemed to include
                           the masculine, feminine or neuter gender; all
                           singular words shall include the plural and all
                           plural shall include the singular.

                  k.       HEADINGS. The headings used in this Agreement are
                           used for reference purposes only and are not to be
                           deemed controlling with respect to the contents
                           thereof.

                  l.       COUNTERPARTS. This Agreement may be executed in any
                           number of counterparts, and each such counterpart
                           shall for all purposes be deemed to be an original.

                  m.       INCORPORATION BY REFERENCE. The Exhibits referred to
                           in this Agreement are hereby incorporated into this
                           Agreement by reference.

                           IN WITNESS WHEREOF, the parties hereto have executed
this Agreement on the day and year first above written.

PLEDGOR:

/s/ Dennis W. Healey
------------------------------------
DENNIS W. HEALEY


PLEDGEE:

VIRAGEN, INC.


By:


/s/ Jose Ortega
------------------------------------
Jose Ortega
Controller

ESCROW AGENT:

ATLAS PEARLMAN P.A.

By:


------------------------------------
Authorized Person