.UTC is the file format which is used for NPC's in the game. UTC files contain all sorts of different data which dictates the different properties of the NPC.
There are also .UTI files for items, .UTP files for placeables, .UTW files for waypoints etc etc. The list goes on.
You can either use the editor included with KotOR Tool or you can use a GFF Editor to edit them. If you choose the GFF Editor root, i'd recommend K-GFF
as it's the safest bet when it comes to KotOR.