UPDATE 2-Woodward unit pays $25 mln to settle U.S. charges

* Settles civil, criminal charges it overcharged military

* Two former executives to be arraigned at later date (Adds company statement)

WASHINGTON Oct 15 (Reuters) - A unit of Woodward Governor Co WGOV.O has agreed to pay $25 million to settle civil and criminal charges that it overcharged the U.S. government in military contracts, the Justice Department said on Thursday.

The unit, MPC Products Corp, will also plead guilty to a felony wire fraud charge, the department said in a statement, adding that the department plans to ask a judge to impose a sentence of two years' probation and a $2.5 million criminal fine.

The company, which makes electronic and mechanical parts for military systems like helicopters and fighter jets, admitted in the criminal case that it began in the 1990s and went through 2005 overcharging the government by falsifying its cost or pricing data, the Justice Department said.

Two former executives were also charged with obstructing a federal audit and they will face arraignment in court at a later date, according to the government.

The case arose from a whistle-blower employee who will receive $4.5 million as his share of the settlement.

MPC was acquired by Woodward Governor in 2008. Earlier this month, the firm was given the green light by the U.S. government to participate in federal contracts again after being suspended in July.

"The misconduct at issue occurred several years prior to Woodward's acquisition of MPC and involved individuals who are no longer employees of MPC," Thomas Gendron, chairman and chief executive officer of Woodward, said in a statement.

Woodward shares were down 26 cents, or 1 percent to $25.43 in afternoon trading on Nasdaq. (Reporting by Jeremy Pelofsky, editing by Tim Dobbyn and Gerald E. McCormick)