CPR BE40 LEVEL AT 4000 FT MAKES AN EVASIVE ACTION CLB TO AVOID VFR C172 IN VFR CLB TO 5000 FT. RPTR STATES THEY WERE IN AND OUT OF CLOUDS DURING CLB TO 4000 FT. C172 WAS OBSERVED ON TCASII AND TFC WAS ISSUED BY ATC. C172 WAS SIGHTED VISUALLY AND NOTED ON TCASII TO BE 600 FT BELOW AND CLBING WHEN EVASIVE ACTION WAS TAKEN.

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WE TAXIED FOR DEP ON RWY 21 AND WHILE TAXIING; CALLED LOU FSS THROUGH THE RCO ON 122.4 FOR AN IFR CLRNC TO MGY. LOU ACKNOWLEDGED OUR CLRNC ON REQUEST AND ABOUT 1 MIN LATER WE HEARD A C172 CALL LOU ON THE RCO FREQ AND RPT AIRBORNE OFF OF BWG REQUESTING AN IFR CLRNC. LOU SUGGESTED TO THE C172 THAT SINCE HE WAS AIRBORNE; HE SHOULD CONTACT ZME ON 133.85 FOR HIS CLRNC. THE LOU CTLR ADVISED US HE HAD OUR CLRNC BUT WANTED TO CONFIRM IT WITH ZME DUE TO THE POSSIBLE CONFLICT WITH THE C172. A FEW MOMENTS LATER; LOU GAVE US OUR CLRNC WHICH READ: 'CLRED AS FILED; CLB AND MAINTAIN 4000 FT; CONTACT ZME 133.85 AFTER DEP.' I DON'T REMEMBER THE SQUAWK AND WE HAD A 10 MIN VOID TIME. AT THIS POINT I SHOULD POINT OUT THAT THE CLOUD FORMATIONS THE ASOS WAS RPTING SEEMED INCORRECT IN MY OPINION. IT SEEMED THAT THE 3500 FT SCATTERED LAYER HAD BECOME MORE BROKEN. ADDITIONALLY; AFTER DEP; WE WERE CONTINUALLY IN AND OUT OF THE CLOUDS AT 4000 FT. AT THE TIME OF DEP; WE HAD THE C172 IN SIGHT AND TARGETED ON OUR TCASII; CLBING NEBOUND. I THOUGHT HE WOULD STAY BELOW THE BASE OF THE CLOUDS AND SINCE WE WERE CLRED TO 4000 FT; I DIDN'T FORESEE A CONFLICT. WE LOST SIGHT OF THE C172 WHEN WE PENETRATED THE FIRST LAYER OF CLOUDS. WHEN WE CONTACTED ZME; THE CTLR ADVISED US OF THE C172'S POS AND SAID HE WAS CLBING VFR TO 5000 FT; SEBOUND. WE WERE IN AND OUT OF IMC LEVEL AT 4000 FT; NEBOUND. AT THIS POINT; I NOTICED THE C172 ON MY TCASII AT MY 9-10 O'CLOCK POS; LESS THAN 3 MI; 1000 FT BELOW AND CLBING. ZME THEN RPTED HIS POS TO US AGAIN AND MY FO THEN SPOTTED THE C172 AT 10 O'CLOCK POS; LESS THAN A MI AND THE TCASII SHOWED HIM 600 FT BELOW AND CLBING. I TOLD THE FO TO RPT TO ZME THAT WE WERE CLBING TO AVOID THE TFC BUT BEFORE HE COULD DO SO; ZME ISSUED US A CLB TO FL230. THE LAST TIME I SAW THE C172 HE WAS MAKING A HARD R TURN. I DON'T KNOW IF HIS TURN WS TO AVOID US OR THE CLOUDS. I WOULD LIKE TO RE- ITERATE THE FACT THAT NEITHER OF US WERE IN VFR CONDITIONS.