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When you upgrade your theme, UltraCart does a pre-upgrade check to see if any merge conflicts are going to occur. If If true, you will be presented with the following dialog:
Click Here 
If indeed you see the above warning about conflicts, Click the Duplicate and Upgrade button. If you've never confronted Merge Conflicts, click here for documentation on Handling Merge Conflicts.
TODO: Need to show the dialog that appears if there is a conflict.