This is a known issue. SMO's usage against .Net 4.0 hasn't been signed off or announced by Microsoft. We will have to wait for an update or a new version of SQL Server. In the meantime, this can only work by creating a MyEXEName.exe.config file in the application directory having this:

<?xml version="1.0" encoding="utf-8" ?> 
<configuration> 
  <startup useLegacyV2RuntimeActivationPolicy="true"> 
            <supportedRuntime version="v4.0" />    
  </startup> 
  <runtime> 
    <generatePublisherEvidence enabled="false" /> 
  </runtime> 
</configuration>