Exonuclease that digests recessed strands of DNA duplexes in the 3' to 5' direction but hardly single-stranded DNA or blunt-ended duplexes. Also able to digest 3'-protruding strands and 3'-recessed strand termini of duplexes containing mismatched bases. Activated upon interaction with the KU heterodimer. Not stimulated by ATP. Interacts with KU70 and KU80. Interacts with RECQL2. Expressed ubiquitously. Early flowering. Loss of post-transcriptional gene silencing (PTGS), but not of transcriptional gene silencing (TGS). Helix-distorting lesions (apurinic sites and cholesterol adducts) and oxidative DNA damage (such as 8-oxoadenine and 8-oxoguanine) block the exonuclease activity, while other DNA modifications such as uracil, hypoxanthine or ethenoadenine have no effects.