<PAGE>
 
                                                                   Exhibit 10.27

                              SEPARATION AGREEMENT

This Separation Agreement (this "Agreement") is made and entered into as of
February 4, 1998 by and between Allin Communications Corporation, a Delaware
corporation ("Allin"), and Brian K. Blair ("Blair").

                                  WITNESSETH:
                                  -----------

     WHEREAS, Allin and Blair are parties to that certain Employment Agreement
dated as of August 1, 1996 (the "Employment Agreement"); and

     WHEREAS, as of the date hereof, Blair has tendered his resignation as an
employee and officer of Allin and each of its subsidiaries; and

     WHEREAS, Allin and Blair desire to amend certain provisions of the
Employment Agreement and to provide for certain additional agreements which
will govern the parties' relationship from and after the date hereof.

     NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained and intending to be legally bound hereby, the parties agree as
follows:

     1.   Definitions.  Capitalized terms used but not defined herein shall
          -----------                                                      
have the meanings ascribed to them in the Employment Agreement.

     2.   Termination of Employment Period.  The Employment Period provided
          --------------------------------                                 
for in the Employment Agreement is terminated as of the date hereof.

     3.   Compensation and Other Benefits.  Section 3 of the Employment
          -------------------------------   
Agreement is amended and restated in its entirety, effective as of February 1,
1998, to read as follows:

          (a)  Periodic Payments.  Allin will make 24 semi-monthly payments to
               -----------------                                              
Blair of $6,250 each during the one-year period commencing with February 1998
and ending with January 1999.

          (b)  Lump Sum Payment.  On or before March 1, 1998, Allin will pay to
               ----------------                                                
Blair $75,000.

          (c)  Accrued Vacation Payments.  Blair will be entitled to receive
               -------------------------                                    
payment from Allin in an aggregate amount of $10,384.56, which amount represents
accrued vacation pay under the terms of the Employment Agreement and in
accordance with Allin's policy manual.

          (d)  Reimbursement of Certain Business Expenses.  Allin will reimburse
               ------------------------------------------                       
Blair for reasonable out-of-pocket expenses incurred by him during the
Employment Period, in accordance with Allin's policies as in effect from time to
time, for entertainment, travel, lodging and similar items in connection with
the business of Allin, provided that Blair properly accounts for and promptly
submits appropriate supporting documentation with respect to all such expenses.

          (e)  Stock Option.  If, and to the extent then permitted by the 1997
               ------------                                                   
Stock Plan of Allin Communications Corporation, and if Allin grants to Richard
W. Talarico an option to purchase shares of common stock of Allin in respect of
1997 performance (the "Talarico Option"), Allin will grant to Blair an option
covering the same number of shares of common stock, having the same exercise
price per share and having the same vesting and exercise provisions as the
Talarico Option.

     3.   Computer Equipment.  Blair will be entitled to continue to use the
          ------------------                                                
computer equipment owned by Allin set forth on Exhibit A until such time as
such equipment is fully depreciated by Allin.  Thereafter,

                                                                    Exh. 10.27-A
<PAGE>
 
title to such equipment will be transferred to Blair.  Blair will be responsible
for all costs of maintenance and repair of such equipment.

     5.   Consulting Services.
          ------------------- 

          (a)  Allin will make available to Blair and R. Daniel Foreman
("Foreman") up to an aggregate of 50 hours of consulting services per year in
each of 1998, 1999 and 2000, which services are to be performed by Allin's
subsidiary, Kent Consulting Group, Inc. ("KCG") and Wendy Attenberger.

          (b)  Allin will make available to Blair and Foreman up to an aggregate
of 100 hours of financial services per year in each of 1998, 1999 and 2000,
which services are to be performed by Richard W. Talarico and Dean C. Praskach
(or their successors or equivalents).

          (c)  The services provided for in subsections (a) and (b) of this
section 6 shall be provided only if, and only to the extent that, such services
do not conflict with KCG's business or with Ms. Attenberger's and Messrs.
Talarico's and Praskach's duties and responsibilities to Allin and its
subsidiaries, as the case may be. Allin will not charge Blair for such services.
However, Blair will be responsible for payment of travel and other out-of-pocket
expenses incurred by the person or entity providing the services to Blair.

          (d)  The actual allocation of services as between Blair and Foreman is
to be determined by Blair and Foreman, and Allin shall be entitled to treat any
request for services made by Blair or Foreman under subsections (a) and (b) of
this Section 5 as having been agreed to by Blair and Foreman.

     6.   Survival of Employment Agreement- All provisions of the Employment
          ---------------------------------                                 
Agreement not amended hereby and applicable to the parties thereto following
termination of the Employment Period remain in full force and effect.  The
continuing applicability of all of the foregoing terms of this Agreement and
Allin's obligations hereunder are expressly made contingent on Blair's
compliance with the terms of the Employment Agreement, as amended by this
Agreement.

     7.   Absence of Restrictions.  Blair hereby represents and warrants that
          -----------------------        
he has full power, authority and legal right to enter into this Agreement and
to carry out his obligations and duties hereunder and that the execution,
delivery and performance by Blair of this Agreement will not violate or
conflict with, or constitute a default under, any agreements or other
understandings to which Blair is a party or by which he may be bound or
affected, including, but not limited to, any order, judgment or decree of any
court or governmental agency.

     8.   Release.  In exchange for the payments and benefits offered by Allin
          -------                                                             
under this Agreement, Blair hereby releases and discharges Allin, its benefit
plans, officers, directors, employees, agents, shareholders, affiliates,
successors and assigns from all liability upon claims of every nature
whatsoever, including, without limitation, claims of negligence, breach of
contract, wrongful discharge, violation of federal, state or local laws, among
which are laws which prohibit discrimination on the basis of race, color,
national origin, religion, sex, age and disability.  This release covers claims,
known or unknown, which are based upon any act, event or failure to act which
occurred before the date of this Agreement.  Blair further agrees that he will
not file, or permit to be filed in his name or on his behalf, any lawsuit
against any of the persons or entities released in this paragraph.

     9.   General.  The following provisions also apply:
          -------                                        

          (a)  Interpretation.  If the provisions of subsections 4(b), 4(c) or
               --------------    
4(d) of the Employment Agreement should be held to be invalid, illegal or
unenforceable by a court of competent jurisdiction because of the time
limitation or geographical area therein provided, such provisions shall
nevertheless be effective and enforceable for such period of time and/or such
geographical area as may be held to be reasonable by such court.  Any provision
of the Employment Agreement, as amended by this Agreement, or of this Agreement
that is invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such

                                                                    Exh. 10.27-B
<PAGE>
 
invalidity, illegality or unenforceability without invalidating or rendering
unenforceable the remaining provisions of the Employment Agreement, as so
amended, and of this Agreement, and any such invalidity, illegality or
unenforceability shall not, of itself, affect the validity, legality or
enforceability of such provision in any other jurisdiction.

          (b)  No Presumption on Interpretation. Nothing herein shall be
               --------------------------------                         
construed more strongly against or more favorably toward either party by reason
of either party having drafted this Agreement or any portion hereof.

          (c)  Binding Effect, No Third Party Beneficiaries.  This Agreement
               --------------------------------------------                 
shall be binding upon, and inure to the benefit of, the parties hereto and their
respective heirs, beneficiaries, executors, administrators, personal
representatives, successors and permissible assigns; provided, however, that
Blair may not assign any of his rights or obligations under this Agreement,
Nothing herein expressed or implied, including the provisions of Section 5,
shall be construed to give any other person or entity any legal or equitable
rights hereunder.

          (d)  Integration.  This Agreement constitutes and contains the entire
               -----------                                                     
Agreement and understanding between the parties with respect to the subject
matter hereof and supersedes any and all prior agreements, if any,
understandings and negotiations relating thereto.  No promise, understanding,
representation, inducement, condition or warranty not set forth herein has been
made or relied upon by any party hereto.

          (e)  Waivers.  Modification.  This Agreement, or any provision hereof,
               ----------------------
may be amended, supplemented or modified only by a writing signed by both
parties and may be waived only by a writing signed by the party to be bound
thereby.  A written waiver of any provision shall be valid only in the instance
for which given and shall not be deemed to be a continuing waiver or construed
as a waiver of any other provisions.

          (f)  Governing Law.  This Agreement shall be construed in accordance 
               -------------
with and governed in all respects by the laws of the Commonwealth of
Pennsylvania (without giving effect to the conflicts of laws provisions
thereof).

          (g)  Counterparts.  This Agreement may be executed in counterparts, 
               ------------
each of which shall, when executed, be deemed to be an original and all of
which shall be deemed to be one and the same instrument.
 
     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.


                                       ALLIN COMMUNICATIONS CORP.

                                       By: /s/ Richard W. Talarico
                                       Its: Chairman and CEO
                                       Date: February 4, 1998

                                       Brian K. Blair
WITNESS:

/s/ Kayleen L. Shaw                    By: /s/ Brian K. Blair
                                       Date: February 4, 1998



                                                                    Exh. 10.27-C