  We carefully analyze the N=2 dual pair of string theories in four dimensions
introduced by Ferrara, Harvey, Strominger and Vafa. The analysis shows that a
second discrete degree of freedom must be switched on in addition to the known
`Wilson line' to achieve a non-perturbatively consistent theory. We also
identify the phase transition this model undergoes into another dual pair via a
process analogous to a conifold transition. This provides the first known
example of a phase transition which is understood from both the type II and the
heterotic string picture.
