Need to upgrade a theme that is not in www.ads-software.com database

I am using a plugin that is offered through www.ads-software.com that has highly recommended (for 100% compatibility) the Avalon Theme. This theme is not currently offered through WP themes. I can get a download of a new version from the developer. However, I don’t know how to update a theme, only upload a new one, from outside of WordPress. I don’t want to lose all of my theme settings and customization. Any advice?

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