Unexpected element '{urn:jboss:domain:1.7}server' exception after upgrading JBoss EAP from 6.3 to 6.4

Issue

• After upgrading from JBoss EAP 6.3 to JBoss EAP 6.4 server startup fails with exception:

ERROR [org.jboss.as.server] (Controller Boot Thread) JBAS015956: Caught exception during boot: org.jboss.as.controller.persistence.ConfigurationPersistenceException: JBAS014676: Failed to parse configuration
    at org.jboss.as.controller.persistence.XmlConfigurationPersister.load(XmlConfigurationPersister.java:141) [jboss-as-controller-7.4.0.Final-redhat-19.jar:7.4.0.Final-redhat-19]
    at org.jboss.as.server.ServerService.boot(ServerService.java:321) [jboss-as-server-7.4.0.Final-redhat-19.jar:7.4.0.Final-redhat-19]
    at org.jboss.as.controller.AbstractControllerService$1.run(AbstractControllerService.java:254) [jboss-as-controller-7.4.0.Final-redhat-19.jar:7.4.0.Final-redhat-19]
    at java.lang.Thread.run(Thread.java:745) [rt.jar:1.8.0_60]
Caused by: javax.xml.stream.XMLStreamException: ParseError at [row,col]:[3,1]
Message: Unexpected element '{urn:jboss:domain:1.7}server'