<PAGE>

                                                                   EXHIBIT 10.77

                        AGREEMENT AND COMPLETE RELEASE

     WHEREAS John Osborne (hereinafter "Osborne") and drkoop.com, Incorporated
(hereinafter "drkoop.com") wish to end the employment relationship between them
and to fully and finally resolve all differences between them, the following
constitutes their AGREEMENT:

     In exchange for the mutual covenants herein expressed, the parties agree as
follows:

1.  Osborne shall resign from his employment effective on July 7, 2000 (the
    "Termination Effective Date"). The Employment Agreement of May 24, 1999,
    between Osborne and drkoop.com shall terminate as of July 5, 2000. (A copy
    of the Employment Agreement is attached hereto as Exhibit A.) Osborne's
    resignation shall be deemed a termination without cause for purposes of all
    stock option exercise periods. Notwithstanding the termination of the
    Employment Agreement, Osborne shall remain bound by his promises regarding
    nondisclosure and return of confidential information, assignment of
    intellectual property, non-competition, and non-solicitation as set forth in
    Article V of the Employment Agreement.

2.  In consideration for this Agreement, and following the expiration of the
    revocation period described below without Osborne having exercised his
    revocation right, drkoop.com will: (a) pursuant to the drkoop.com, Inc.
    Severance Plan For Select Employees and as a vested, accrued and irrevocable
    benefit thereunder provided that Osborne does not breach this Agreement, pay
    Osborne the gross sum of $140,000.00, less all applicable withholdings, in
    twelve monthly installments beginning on the first regularly scheduled pay
    day following the expiration of the revocation period described below; (b)
    allow Osborne to keep his laptop computer and cell phone; and (c) have
    amended all Osborne's outstanding stock option agreements such that the
    shares subject to the options are fully vested and the options are
    immediately exercisable following the expiration of the revocation period
    described below (such amendments are attached as Exhibits B, C, D, and E
    hereto).

3.  In consideration for this Agreement, Osborne will: (a) provide his services
    as an independent contractor-consultant as provided in Exhibit F; and (b)
    abide by his promises herein.

4.  Osborne understands, agrees, and expressly represents that the consideration
    recited in the foregoing Paragraph 2 is separate from and additional to any
    payments or benefits to which he was already entitled by virtue of his
    services to drkoop.com and to which he has no legal right. Osborne
    understands, agrees, and expressly represents that, apart from the
    consulting arrangement described above in Paragraph 3 and Exhibit F, he will
    be entitled to no further compensation or payments of any type from
    drkoop.com.
<PAGE>

5.  Apart from the consulting arrangement described above in Paragraph 3,
    Osborne WAIVES AND DISCLAIMS any claim or right he may have to be engaged or
    employed by drkoop.com or any of its affiliate companies at any time in the
    future and promises not to seek or demand future engagement or employment
    with drkoop.com or any of its affiliate companies, it being agreed, however,
    that this provision shall not preclude drkoop.com from requesting on its
    initiative and in its sole discretion that Osborne be employed by it, or
    subsequently employing Osborne, in the future.

6.  Osborne represents and affirms that within two (2) business days of the
    Termination Effective Date he will return any and all drkoop.com property he
    may have had, including but not limited to confidential information as
    defined in the Employment Agreement but excluding the cell phone and laptop
    computer conveyed to Osborne as provided in Paragraph 2.

7.  Osborne agrees to keep both the existence and the terms of this Agreement
    confidential, and not to disclose any information regarding this Agreement
    to anyone other than his attorney, tax advisor and spouse (if any) who shall
    be informed of and bound by this confidentiality provision.

8.  Osborne does, for himself and his heirs, agents, executors, administrators,
    and assigns hereby RELEASE and FOREVER DISCHARGE drkoop.com and its
    directors, officers, employees, agents, attorneys, successors, predecessors,
    assigns, and affiliated companies (collectively "Releasees") from any and
    all claims, actions, and causes of action of whatever kind or nature, which
    he may now have or ever may have had against the Releasees or any of them,
    whether known or unknown to him, such as may have arisen in whole or in part
    at any time prior to or on the date of execution of this Agreement. This
    includes, but is not limited to, any claims arising out of any contract,
    express or implied, any covenant of good faith and fair dealing, express or
    implied, any tort (whether intentional or negligent, including claims
    arising out of the NEGLIGENCE OR GROSS NEGLIGENCE of any person released in
    this Agreement), and any federal, state, or other governmental statute,
    regulation, or ordinance relating to employment discrimination, termination
    of employment, or payment of wages or provision of benefits, including
    without limitation Title VII of the Civil Rights Act of 1964 as amended, the
    Civil Rights Act of 1991, the Age Discrimination in Employment Act as
    amended, the Americans with Disabilities Act, the Employee Retirement Income
    Security Act, the Family and Medical Leave Act, the Fair Labor Standards
    Act, the Texas Commission on Human Rights Act, the Texas Payday Law, and the
    Texas Workers' Compensation Act. Osborne and drkoop.com agree that by this
    Agreement, Osborne is not releasing any claims he may have under the Age
    Discrimination in Employment Act that may arise after this Agreement becomes
    effective (i.e., after the revocation period described in Paragraph 9
    elapses without Osborne having exercised his revocation right).
<PAGE>

9.  Osborne has a maximum of twenty-one (21) days from July 7, 2000, in which to
    review and consider this Agreement before signing it, and may use as much or
    as little of that period as he wishes. After Osborne signs this Agreement,
    Osborne has seven (7) days in which to revoke the Agreement. Any such
    revocation will not be effective unless Osborne delivers a written notice of
    such revocation to drkoop.com c/o Donald Hackett, President and CEO, 7000
    North Mopac, Suite 400, Austin, Texas 78731, no later than the close of
    business on the seventh day after Osborne signs this Agreement.

10. drkoop.com does for itself and its directors, officers, employees, agents,
    attorneys, successors, predecessors, assigns, and affiliated companies, does
    hereby RELEASE and FOREVER DISCHARGE Osborne from any and all claims,
    actions, and causes of action of whatever kind or nature, which they, or any
    of them, may now have or ever may have had against Osborne whether known or
    unknown to them, such as may have arisen in whole or part at any time prior
    to or on the date of execution of this Agreement. This Release includes, but
    is not limited to, any claims arising out of any contract, express or
    implied, any covenant of good faith and fair dealing, express or implied,
    any tort (whether intentional or negligent, including claims arising out of
    the NEGLIGENCE OR GROSS NEGLIGENCE of any person released in this
    Agreement), and any federal, state, or other governmental statute,
    regulation, or ordinance of any kind whatsoever.

11. The parties hereto expressly PROMISE NOT TO SUE OR INSTITUTE OTHER LEGAL
    PROCEEDINGS on the basis of any claims, actions, or causes of action that
    are being released by this Agreement. Each party understands and agrees that
    if he or it breaches this promise and files a lawsuit or institutes other
    legal proceedings with any court or governmental agency, he or it will pay
    for all costs incurred by the released party or parties, or any of them,
    including attorneys' fees.

12. Each party hereto understands and agrees that by entering into this
    Agreement, neither Osborne nor drkoop.com is admitting any liability or
    wrongdoing. Rather, each party understands and agrees that this Agreement is
    merely to settle any differences between them arising out of Osborne's
    relationship with drkoop.com and the termination of that relationship.

13. Osborne agrees that he will not, directly or indirectly, in any individual
    or representative capacity whatsoever, make any statement, oral or written,
    or perform any act or omission which is or could be detrimental in any
    material respect to the reputation or goodwill of drkoop.com or any other
    person or entity released herein except as may be required by law, court
    order, government agency request or subpoena, or to defend himself in
    connection with a legal proceeding. Osborne further agrees he will not
    voluntarily participate in, or aid or encourage any other party in
    connection with, any lawsuit or proceeding of any kind brought or asserted
    by any person or entity against drkoop.com or any other person or entity
    released herein.

<PAGE>

14.  drkoop.com agrees that it will not make any statement, oral or written, or
     perform any act or omission which is or could be detrimental in any
     material respect to the reputation or goodwill of Osborne, except as may be
     required by law, court order, government agency request or subpoena, or to
     defend itself in connection with a legal proceeding. drkoop.com's
     obligations under this paragraph shall be limited to statements made by any
     officer who was an officer of drkoop.com at the time the statement was
     made. In response to inquiries from prospective employers, drkoop.com will
     provide a neutral letter of reference.

15.  drkoop.com and Osborne agree that press releases regarding Osborne's
     resignation will be mutually acceptable.

16.  Osborne hereby agrees that he is solely responsible for all federal, state,
     and local tax obligations, if any, including, but not limited to, all
     reporting and payment obligations that may arise as a consequence of this
     Agreement. Osborne acknowledges that drkoop.com and the other persons or
     entities released herein make no representations regarding the tax
     treatment or consequences of such benefit(s). Osborne agrees to indemnify
     and hold drkoop.com and the other persons or entities released herein, or
     any of them, harmless from and against any and all loss, cost, damage, or
     expense, including, without limitation, attorneys' fees, penalties or
     interest, incurred by drkoop.com and the other persons or entities released
     herein, or any of them, arising out of the tax treatment of the benefit(s)
     received by Osborne as a result of his employment with drkoop.com, his
     stock options, his services as a consultant, or this Agreement.

17.  Osborne and drkoop.com agree that any dispute or claim relating to, arising
     from, or connected in any manner with this Agreement--except for claims
     concerning Osborne's promises regarding nondisclosure and return of
     confidential information, assignment of intellectual property, non-
     competition, and non-solicitation as set forth in Article V of the
     Employment Agreement--exclusively shall be resolved through final and
     binding arbitration. Claims concerning Osborne's promises regarding
     nondisclosure and return of confidential information, assignment of
     intellectual property, non-competition, and non-solicitation as set forth
     in Article V of the Employment Agreement may be submitted to arbitration
     upon mutual consent of the parties. The arbitration shall proceed in accord
     with the National Rules for the Resolution of Employment Disputes of the
     American Arbitration Association ("AAA") in effect at the time the claim or
     dispute arose, unless other rules are agreed upon by the parties. The
     arbitration shall be conducted in Austin, Texas, by one arbitrator who is a
     member of the AAA, unless the parties mutually agree otherwise. The
     arbitrator shall have jurisdiction to determine any claim, including the
     arbitrability of any claim, submitted to his or him. The arbitrator may
     grant any relief authorized by law for any properly established claim.
     Prior to the hearing, the AAA exclusively shall have the authority to
     determine and allocate filing and administrative fees and arbitrator's
     hearing and study fees between the parties. The arbitrator may reallocate
     the pre-hearing fees, costs, and expenses incurred by the parties in any
<PAGE>

     final arbitration award in accordance with Paragraph 11. The interpretation
     and enforceability of this Paragraph of this Agreement exclusively shall be
     governed and construed in accord with the United States Federal Arbitration
     Act, 9 U.S.C. (S)1, et. seq.

18.  This Agreement constitutes the entire agreement between the parties with
     respect to the subject matter hereof and supersedes all other agreements
     between the parties with respect to the subject matter hereof. No waiver,
     amendment, or modification of this Agreement shall be valid unless in
     writing and signed by each of the parties.

19.  The provisions of this Agreement are severable. If any provision is held to
     be invalid or unenforceable, it shall not affect the validity or the
     enforceability of any other provision.

20.  This Agreement shall be interpreted and enforced under the laws of the
     state of Texas.

                           [SIGNATURE PAGE FOLLOWS]
<PAGE>

     OSBORNE UNDERSTANDS THAT HE HAS THE RIGHT TO DISCUSS ALL ASPECTS OF THIS
AGREEMENT AND COMPLETE RELEASE ("AGREEMENT") WITH AN ATTORNEY OF HIS CHOICE.  BY
HIS SIGNATURE BELOW, OSBORNE AGREES THAT HE HAS EXERCISED THIS RIGHT TO THE
EXTENT HE DESIRED, THAT HE HAD A SUFFICIENT PERIOD OF TIME TO REVIEW THIS
AGREEMENT, THAT HE FULLY UNDERSTANDS THIS AGREEMENT, AND THAT THIS AGREEMENT IS
MADE KNOWINGLY AND VOLUNTARILY.

     IN WITNESS THEREOF, the parties have affixed their signatures in the spaces
provided on this 7th day of July, 2000.


drkoop.com, Inc.                        John Osborne, An Individual



BY: /s/ Donald W. Hackett               /s/ John Osborne
    ------------------------            --------------------------
    Donald W. Hackett
    President and Chief Executive Officer


STATE OF TEXAS      )
                    )  ss.
COUNTY OF TRAVIS    )

     BEFORE ME, the undersigned notary public, on this day personally appeared
JOHN OSBORNE, known to me to be the person who executed the foregoing
instrument, and acknowledged to me that he executed the same for the purposes
and consideration therein expressed.

     GIVEN under my hand and seal of office, this 7th day of July, 2000.


                                   /s/ Bobbie Garrison
                                   -----------------------------
                                   Notary Public in and for the State of Texas
<PAGE>

                                   EXHIBIT B

                           AMENDMENT TO JUNE 4, 1999
               DRKOOP.COM, INC. INCENTIVE STOCK OPTION AGREEMENT
                                FOR JOHN OSBORNE

          THIS AMENDMENT ("Amendment") is entered into by and between John
Osborne ("Employee") and the Compensation Committee (the "Committee"), effective
as of July 7, 2000, the date prior to the date Employee's employment with
drkoop.com, Inc. (the "Company") is terminated (the "Effective Date").

          WHEREAS, Employee and the Company are parties to the drkoop.com, Inc.
Incentive Stock Option Agreement with a date of grant of June 4, 1999 (the
"Agreement"), granted pursuant to the 1999 Equity Participation Plan of
drkoop.com, Inc. (the "Plan"); and

          WHEREAS, the Committee has been appointed pursuant to Section 10.1 of
the Plan; and

          WHEREAS, pursuant to Section 5.3(a) of the Plan, the Committee may
accelerate the period during which an option vests; and

          WHEREAS, the Committee and Employee now desire to amend the Agreement;

          NOW, THEREFORE, for and in consideration of the premises and the
mutual benefits to the parties arising out of this Amendment, the receipt and
sufficiency of which are hereby acknowledged by the parties, the Committee and
Employee agree that the Agreement shall be amended as follows:

1.  As of the Effective Date, Section 3 of the Agreement shall be amended by
    adding the following provision:

    Notwithstanding the foregoing, in the event that Optionee resigns from
    employment with the Company, all shares subject to this Option shall vest
    immediately and such Option shall be fully exercisable as of the expiration
    of the revocation right contained in the agreement between Optionee and the
    Company that governs such resignation.

2.  As amended hereby, the Agreement is ratified and reaffirmed.

3.  Notwithstanding any provision in this Amendment to the contrary, in the
    event that Optionee exercises the revocation right contained in the
    agreement between Optionee and the Company that governs Optionee's
    resignation, this Amendment shall be null, void, and of no effect.
<PAGE>

     EXECUTED this 7 day of July, 2000.

                                      SECRETARY FOR BOARD OF DIRECTORS MEETING


                                      /s/ Donald Hackett
                                      ----------------------------



                                      JOHN OSBORNE


                                      /s/ John Osborne
                                      ----------------------------
<PAGE>

                                   EXHIBIT C

                          AMENDMENT TO APRIL 28, 2000
               DRKOOP.COM, INC. INCENTIVE STOCK OPTION AGREEMENT
                       FOR 50,000 SHARES TO JOHN OSBORNE

          THIS AMENDMENT ("Amendment") is entered into by and between John
Osborne ("Employee") and the Compensation Committee (the "Committee"), effective
as of July 7, 2000, the date prior to the date Employee's employment with
drkoop.com, Inc. (the "Company") is terminated (the "Effective Date").

          WHEREAS, Employee and the Company are parties to the drkoop.com, Inc.
Incentive Stock Option Agreement for 50,000 shares, with a date of grant of
April 28, 2000, (the "Agreement") granted pursuant to the 1999 Equity
Participation Plan of drkoop.com, Inc. (the "Plan"); and

          WHEREAS, the Committee has been appointed pursuant to Section 10.1 of
the Plan; and

          WHEREAS, pursuant to Section 5.3(a) of the Plan, the Committee may
accelerate the period during which an option vests; and

          WHEREAS, the Committee and Employee now desire to amend the Agreement;

          NOW, THEREFORE, for and in consideration of the premises and the
mutual benefits to the parties arising out of this Amendment, the receipt and
sufficiency of which are hereby acknowledged by the parties, the Company and
Employee agree that the Agreement shall be amended as follows:

1.   As of the Effective Date, Section 3 of the Agreement shall be amended by
     adding the following provision:

     Notwithstanding the foregoing, in the event that Optionee resigns from
     employment with the Company, all shares subject to this Option shall vest
     immediately and such Option shall be fully exercisable as of the expiration
     of the revocation right contained in the agreement between Optionee and the
     Company that governs such resignation.

2.   As amended hereby, the Agreement is ratified and reaffirmed.

3.   Notwithstanding any provision in this Amendment to the contrary, in the
     event that Optionee exercises the revocation right contained in the
     agreement between Optionee and the Company that governs Optionee's
     resignation, this Amendment shall be null, void, and of no effect.
<PAGE>

     EXECUTED this 7 day of July, 2000.


                              SECRETARY FOR BOARD OF DIRECTORS MEETING


                              /s/ Donald Hackett
                              ------------------



                              JOHN OSBORNE


                              /s/ John Osborne
                              ----------------
<PAGE>

                                   EXHIBIT D

                          AMENDMENT TO APRIL 28, 2000
               DRKOOP.COM, INC. INCENTIVE STOCK OPTION AGREEMENT
                       FOR 24,000 SHARES TO JOHN OSBORNE

          THIS AMENDMENT ("Amendment") is entered into by and between John
Osborne ("Employee") and the Compensation Committee (the "Committee"), effective
as of July 7, 2000, the date prior to the date Employee's employment with
drkoop.com, Inc. (the "Company") is terminated (the "Effective Date").

          WHEREAS, Employee and the Company are parties to the drkoop.com, Inc.
Incentive Stock Option Agreement for 24,000 shares, with a date of grant of
April 28, 2000, (the "Agreement") granted pursuant to the 1999 Equity
Participation Plan of drkoop.com, Inc. (the "Plan"); and

          WHEREAS, the Committee has been appointed pursuant to Section 10.1 of
the Plan; and

          WHEREAS, pursuant to Section 5.3(a) of the Plan, the Committee may
accelerate the period during which an option vests; and

          WHEREAS, the Committee and Employee now desire to amend the Agreement;

          NOW, THEREFORE, for and in consideration of the premises and the
mutual benefits to the parties arising out of this Amendment, the receipt and
sufficiency of which are hereby acknowledged by the parties, the Company and
Employee agree that the Agreement shall be amended as follows:

1.   As of the Effective Date, Section 3 of the Agreement shall be amended by
     adding the following provision:

     Notwithstanding the foregoing, in the event that Optionee resigns from
     employment with the Company, all shares subject to this Option shall vest
     immediately and such Option shall be fully exercisable as of the expiration
     of the revocation right contained in the agreement between Optionee and the
     Company that governs such resignation.

2.   As amended hereby, the Agreement is ratified and reaffirmed.

3.   Notwithstanding any provision in this Amendment to the contrary, in the
     event that Optionee exercises the revocation right contained in the
     agreement between Optionee and the Company that governs Optionee's
     resignation, this Amendment shall be null, void, and of no effect.
<PAGE>

     EXECUTED this 7 day of July, 2000.

                              SECRETARY FOR BOARD OF DIRECTORS MEETING


                              /s/ Donald Hackett
                              ------------------



                              JOHN OSBORNE


                              /s/ John Osborne
                              ----------------
<PAGE>

                                   EXHIBIT E

                           AMENDMENT TO JUNE 5, 2000
               DRKOOP.COM, INC. INCENTIVE STOCK OPTION AGREEMENT
                                TO JOHN OSBORNE

          THIS AMENDMENT ("Amendment") is entered into by and between John
Osborne ("Employee") and the Compensation Committee (the "Committee"), effective
as of July 7, 2000, the date prior to the date Employee's employment with
drkoop.com, Inc. (the "Company") is terminated (the "Effective Date").

          WHEREAS, Employee and the Company are parties to the drkoop.com, Inc.
Incentive Stock Option Agreement with a date of grant of June 5, 2000 (the
"Agreement"), granted pursuant to the 1999 Equity Participation Plan of
drkoop.com, Inc. (the "Plan"); and

          WHEREAS, the Committee has been appointed pursuant to Section 10.1 of
the Plan; and

          WHEREAS, pursuant to Section 5.3(a) of the Plan, the Committee may
accelerate the period during which an option vests; and

          WHEREAS, the Committee and Employee now desire to amend the Agreement;

          NOW, THEREFORE, for and in consideration of the premises and the
mutual benefits to the parties arising out of this Amendment, the receipt and
sufficiency of which are hereby acknowledged by the parties, the Company and
Employee agree that the Agreement shall be amended as follows:

1.   As of the Effective Date, the Agreement shall be amended by adding the
     following provision:

     Notwithstanding anything to the contrary herein, in the event that Optionee
     resigns from employment with the Company, all shares subject to this Option
     shall vest immediately and such Option shall be fully exercisable as of the
     expiration of the revocation right contained in the agreement between
     Optionee and the Company that governs such resignation.

2.   As amended hereby, the Agreement is ratified and reaffirmed.

3.   Notwithstanding any provision in this Amendment to the contrary, in the
     event that Optionee exercises the revocation right contained in the
     agreement between Optionee and the Company that governs Optionee's
     resignation, this Amendment shall be null, void, and of no effect.
<PAGE>

     EXECUTED this 7 day of July, 2000.

                              SECRETARY FOR BOARD OF DIRECTORS MEETING


                              /s/ Donald Hackett
                              ------------------



                              JOHN OSBORNE


                              /s/ John Osborne
                              ----------------
<PAGE>

                                   EXHIBIT F
                              Consulting Agreement

          drkoop.com agrees to retain Osborne, and Osborne agrees to serve, as
an independent contractor-consultant in the capacity of Acting Vice President of
Marketing for a minimum period of 30 days following the Termination Effective
Date (the "Consulting Period").  Osborne shall be compensated at the rate of
$2,916.67 per week during the Consulting Period.  Upon mutual written agreement,
Osborne's service as an independent-contractor consultant may continue beyond
the Consulting Period defined above.

          Osborne's duties shall be to advise drkoop.com's President and Chief
Executive Officer and to carry out the instructions given and tasks delegated by
the President and Chief Executive Officer to him.  Osborne shall have no
independent authority to bind or act on behalf of the company.  Osborne
understands and agrees that he shall in no sense be considered an employee of
drkoop.com or any related entity while engaging in the activities provided for
under this Consulting Agreement.  In keeping with this independent contractor
status, Osborne is free to control his methods of work, provided that Osborne
continues to render his best efforts for drkoop.com under this Agreement.

          As a consequence of Osborne's independent contractor status, Osborne
is not, under this Consulting Agreement, entitled to, or eligible to participate
in, any benefits, privileges, incentives or bonus programs given or extended by
drkoop.com to its employees.  Among other things, Osborne shall have no claim
against drkoop.com hereunder for vacation pay, sick leave, retirement benefits,
social security, unemployment insurance benefits, or employee benefits of any
kind.

          During the term of this Consulting Agreement, Osborne shall be bound
by his promises regarding nondisclosure and return of confidential information,
assignment of intellectual property, non-competition, and non-solicitation as
set forth in Article V of the Employment Agreement as if he were still an
employee of drkoop.com.

          drkoop.com may terminate this Consulting Agreement at any time and for
any reason in its sole discretion; provided, however, that if it terminates the
Consulting Agreement within the Consulting Period, it will pay Osborne $2,916.67
for each full week remaining in the Consulting Period and payment for any
partial week shall be prorated.  drkoop.com's termination of this Consulting
Agreement for any reason at the end of or, in the event Osborne's service
extends beyond the Consulting Period, following the Consulting Period shall not
result in any further payment to Osborne.

          The Indemnification Agreement of May 24, 1999, by and between
drkoop.com and Osborne shall continue in full force and effect during the term
of this Consulting Agreement for Osborne's actions within the scope of his
authority hereunder.