Hi, 

Free exit basically means that if you have been alloted a seat in the first round of counselling and you do not wish to join the college, then you can do so and still be eligible for round 2 counselling.

So it is not compulsory to join the college you have been alloted in the first round.

However in the second round of counselling there is no such provision of free exit. And candidates need to be careful in this round of counselling. 

All the best