There was a breaking change in the Web Application template of Visual Studio 2012 between the RC and RTM versions. We wanted to comply with the latest official version of VS11, so we updated our templates to work with the RTM release.
Updating VS11 is one of the possible solutions for you, however it is the most time-consuming. If you do not want to update at the moment, please just use the standard Web Application template provided by Visual Studio and create the domain model manually by executing the Create Domain Model wizard
Hope that helps.
the Telerik team
Telerik OpenAccess ORM Meets ASP.NET Web API. Read more.