iPhone 5 will not sync with iTunes so can activate

Hello,

I just received 2 iPhone 5s and am having a problem getting one activated. The first one is fine. I followed all the steps on the phone, synced with iTunes and am ready to activate with my carrier. However the second one did not work. I followed the steps and it appears to freeze during the sync process with iTunes.

I am upgrading from iPhone 3 with both phones.

Each phone has a separate iTunes account on separate laptops.

While attempting to activate the phone (in question) the first time, the encrypted password box popped up and we do not use the password for updates. Could not get it past that after a few trys but then it synced. The sync was fast and after it completed nothing happened. The phone still showed "Connected to iTunes" and would not go to the next step.

Anyone have this problem?

Thanks

Jim