The problem was that Entity Framework versions 4.1 and 5 were both installed on my workstation when I encountered this as well. This specific software required the installation on a server running.Net 4, not 4.5. (We are unable to upgrade the server for other reasons.) The ADO.Net Entity Data Model, however, introduced a reference to EF version 5 by default to my project when I added Visual Studio.
It was able to run on the server by removing the EF reference and manually inserting it back as version 4.1.
Perhaps installing.Net 4.5 on your server already fixed this.