Design Pattern when using Entity Framework

I have confusion on Design pattern when working with Entity Framework. My current project has following pattern.

Pattern1: Each box represents a separate class library projects

Now a team member wants to introduce Entity Framework and suggests this:

Pattern2

I have seen several ASP.NET MVC web application samples where they keep DataContext and POCO classes in the same folders and no concept of logical service layer.

Patter1 Argument: Want to keep POCO classes and low level DataAccess call separate. Pattern2 argument: To keep related code in one project promoting "less Cohesion", and "low coupling"

So I want to understand a bit more on these two patterns and when to use one over another.