I noticed that this problem occurs when telerik api is added with "Copy local" enabled, and if the solution is opened in a different machine than the one references were added from. I checked the version for all assemblies, and version is same for all of them, on both the machines. Project target framework is 4.5, and I am using telerik's Q2 version (I believe that is 4.5 as well).
I have added all the telerik assemblies, although I am using only radexpander and gridview for now (I plan to use most of these at later stages).
I noticed that the project is saving the full path of the bin folder instead of relative path. So, on other machine, build fails, and I have to manually add the references again. When I do that, I receive this error.
For your reference, I have updated the sample project to onedrive. You can download the same from http://1drv.ms/1UpwHSG
Kindly let me know if that helps.