CHARTER JET ON VFR FLT PLAN CLBED THROUGH RESTR AREA VPS. FO NEW TO THE OP FAILED TO TURN ON THE XPONDER; CONSEQUENTLY CTLR DID NOT CATCH THE ALTDEV UNTIL THE ACFT WAS AT 12500 FT. DSNDED TO 6500 FT UNTIL CLR OF THE AREA. SAW B1 BOMBER AT 3 MI NO CONFLICT.

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WE DEPARTED DESTIN; FL; RWY 14; TURNED W; HDG 260 DEGS AND CONTACTED EGLIN DEP ON 133.0 MHZ. WE WERE ADVISED TO PROCEED WBOUND OVER THE SHORELINE AND REMAIN CLR OF EGLIN'S RESTR AREAS. WE RPTED WE WERE CLBING THROUGH A SPECIFIC ALT (I DON'T REMEMBER EXACT ALT) CLBING TO 16500 FT. ABOUT 2 MINS LATER; WE WERE ADVISED TO MAINTAIN VFR AT OR BELOW 8500 FT. THIS CLRNC WAS AMENDED TO 6500 FT MSL. I REPLIED THAT WE WERE WELL ABOVE THIS ALT AND WOULD DSND DOWN TO 6500 FT. WE SELECTED FLT IDLE AND STARTED DOWN. EGLIN THEN ASKED US TO SQUAWK ALT AND SAY ALT. WE REPLIED WE WERE AT ABOUT 12500 FT DSNDING TO 6500 FT. WE ALSO RECYCLED ALT ENCODER. IT HAD BEEN LEFT IN THE OFF POS. AS WE DSNDED WE COULD CLRLY SEE A B1 BOMBER TO OUR L (S) AND AN F16 IN FRONT OF US HDG S. WE DIDN'T NEED TO TAKE EVASIVE ACTION AND TOOK NONE. I DID NOT SEE THE OTHER 2 ACFT TAKE ANY EVASIVE ACTION EITHER. EGLIN HANDED US OFF TO PENSACOLA APCH AS WE LEVELED AT 6500 FT WBOUND OVER SHORELINE. PENSACOLA IMMEDIATELY GAVE US CLRNC TO CLB VFR TO 16500 FT; BUT HE WAS UNSURE IF WE HAD REQUESTED 16500 FT OR 6500 FT IN OUR VFR FLT PLAN. WE CLARIFIED WE HAD REQUESTED 16500 FT. IN RETROSPECT; I THINK EGLIN DEP THOUGHT WE HAD REQUESTED 6500 FT AS OUR FINAL VFR ALT. AND AS WE HAD NOT BEEN SQUAWKING ALT; HE DIDN'T KNOW WE HAD CLBED UP TO 12500 FT UNTIL WE VERBALLY RESPONDED WE HAD. IT'S WORTH MENTIONING THAT THE FO I WAS FLYING WITH; FOR THE FIRST TIME; FLIES A LEAR 25 FOR ANOTHER COMPANY. THE OTHER COMPANY HAS A POLICY OF NEVER TURNING THE ALT ENCODER OFF. THEREFORE; HE DIDN'T TURN IT ON; AS PER THE CHKLIST; BEFORE TKOF. THE FO AND I LEARNED FROM OUR FLT TODAY. WE BOTH MADE ERRORS WE WON'T REPEAT.