diff --git a/scripts/powershell/update-agent-context.ps1 b/scripts/powershell/update-agent-context.ps1
index 9c2447a..ec11c7f 100644
--- a/scripts/powershell/update-agent-context.ps1
+++ b/scripts/powershell/update-agent-context.ps1
@@ -107,6 +107,7 @@ function Validate-Environment {
     if (-not (Test-Path $TEMPLATE_FILE)) {
         Write-Err "Template file not found at $TEMPLATE_FILE"
         Write-Info 'Run specify init to scaffold .specify/templates, or add agent-file-template.md there.'
+        exit 1
     }
 }