PicoLisp, ^{160 157 146} 142 bytes

(prin(text"S@1 @2 by the @3,
The shells s@1 are @2,@4.
So if s@1 @2 on the @3,
Then@4 s@1 @3 shells.""he sells"'seashells'seashore" I'm sure"]

Using the template:

S1 by the 2,
The shells s1 are 2,4.
So if s1 on the 3,
Then4 s1 3.

Where 1 is "he sells", 2 is "seashells", 3 is "seashore", and 4 is " I'm sure"

Ideone It!

{ ^{_{14 imaginary interweb points for guessing which syntax highlighting I'm using without peeking}} }

Common Lisp, 160 bytes

(format t"S~a~a by the ~a,~%The shells s~3:*~Aare ~a, I'm sure.~%So if s~3:*~A~a on the ~a,~%Then I'm sure s~3:*~a~*~a shells.""he sells ""seashells""seashore")

https://ideone.com/n7zVUm

PicoLisp, ^{160 157 146 142} 138 bytes

(prin(text"S@1 @2 by the @3,
The @5 s@1 are @2,@4.
So if s@1 @2 on the @3,
Then@4 s@1 @3 @5.""he sells"'seashells'seashore" I'm sure"'shells]

Using the template:

S1 by the 2,
The 5 s1 are 2,4.
So if s1 on the 3,
Then4 s1 3 5.

Where 1 is "he sells", 2 is "seashells", 3 is "seashore", and 4 is " I'm sure"

Ideone It!

{ ^{_{14 imaginary interweb points for guessing which syntax highlighting I'm using without peeking}} }

Common Lisp, 160 bytes

(format t"S~a~a by the ~a,~%The shells s~3:*~Aare ~a, I'm sure.~%So if s~3:*~A~a on the ~a,~%Then I'm sure s~3:*~a~*~a shells.""he sells ""seashells""seashore")

https://ideone.com/n7zVUm

PicoLisp, ^{160 157} 146 bytes

(prin(text"S@1 @2 by the @3,\nThe shells s@1 are @2,@4.\nSo if s@1 @2 on the @3,\nThen@4 s@1 @3 shells.""he sells"'seashells'seashore" I'm sure"))

Using the template:

S1 by the 2,
The shells s1 are 2,4.
So if s1 on the 3,
Then4 s1 3.

Where 1 is "he sells", 2 is "seashells", 3 is "seashore", and 4 is " I'm sure"

Ideone It!

{ ^{_{14 imaginary interweb points for guessing which syntax highlighting I'm using without peeking}} }

Common Lisp, 160 bytes

(format t"S~a~a by the ~a,~%The shells s~3:*~Aare ~a, I'm sure.~%So if s~3:*~A~a on the ~a,~%Then I'm sure s~3:*~a~*~a shells.""he sells ""seashells""seashore")

https://ideone.com/n7zVUm

PicoLisp, ^{160 157 146} 142 bytes

(prin(text"S@1 @2 by the @3,
The shells s@1 are @2,@4.
So if s@1 @2 on the @3,
Then@4 s@1 @3 shells.""he sells"'seashells'seashore" I'm sure"]

Using the template:

S1 by the 2,
The shells s1 are 2,4.
So if s1 on the 3,
Then4 s1 3.

Where 1 is "he sells", 2 is "seashells", 3 is "seashore", and 4 is " I'm sure"

Ideone It!

{ ^{_{14 imaginary interweb points for guessing which syntax highlighting I'm using without peeking}} }

Common Lisp, 160 bytes

(format t"S~a~a by the ~a,~%The shells s~3:*~Aare ~a, I'm sure.~%So if s~3:*~A~a on the ~a,~%Then I'm sure s~3:*~a~*~a shells.""he sells ""seashells""seashore")

https://ideone.com/n7zVUm

PicoLisp, ¹⁶⁰ 157 bytes

(prin(text"She @1 @2 by the @3,\nThe shells she @1 are @2, I'm sure.\nSo if she @1 @2 on the @3,\nThen I'm sure she @1 @3 shells."'sells'seashells'seashore))

Using the template:

She 1 by the 2,
The shells she 1 are 2, I'm sure.
So if she 1 on the 3,
Then I'm sure she 1 3.

Where 1 is "sells", 2 is "seashells", and 3 is "seashore"

Ideone It!

Common Lisp, 160 bytes

(format t"S~a~a by the ~a,~%The shells s~3:*~Aare ~a, I'm sure.~%So if s~3:*~A~a on the ~a,~%Then I'm sure s~3:*~a~*~a shells.""he sells ""seashells""seashore")

https://ideone.com/n7zVUm

PicoLisp, ^{160 157} 146 bytes

(prin(text"S@1 @2 by the @3,\nThe shells s@1 are @2,@4.\nSo if s@1 @2 on the @3,\nThen@4 s@1 @3 shells.""he sells"'seashells'seashore" I'm sure"))

Using the template:

S1 by the 2,
The shells s1 are 2,4.
So if s1 on the 3,
Then4 s1 3.

Where 1 is "he sells", 2 is "seashells", 3 is "seashore", and 4 is " I'm sure"

Ideone It!

{ ^{_{14 imaginary interweb points for guessing which syntax highlighting I'm using without peeking}} }

Common Lisp, 160 bytes

(format t"S~a~a by the ~a,~%The shells s~3:*~Aare ~a, I'm sure.~%So if s~3:*~A~a on the ~a,~%Then I'm sure s~3:*~a~*~a shells.""he sells ""seashells""seashore")

https://ideone.com/n7zVUm