I'm trying to do search/replace on multiple text files.
I'm using the following script:

#!/bin/sh
USAGE=`basename $0`
USAGE=$USAGE' <PATTERN> <SUBSTITUTE> <FILES PATH>'
if test $# -lt 3
then
echo "-I-: $USAGE"
exit 1
fi
PATTERN=$1
shift
SUBSTITUTION=$1
shift
for i;
do
mv $i $i.old;
sed -e 's/$PATTERN/$SUBSTITUTION/g' $i.old > $i;
done
\rm *.old

What happens is that if I echo the commands out to the shell and
execute them, the replacement will occur as expect. If I run to script
to execute the sed command, the resulting output will not have any
change.

Can someone please me understand this?

Thanks in advance,
Pedro Alves