Madulf wants to make a deal with the village

A side quest which can be started in Umar Hills in Shadows of Amn campaign.

Forge a alliance
Just north of town, across the little stream, you will find Madulf (x 3290 y 720), an Ogre Mage and his other ogre cronies. He automatically talks to you, turns out his people are getting killed as well and he doesn't know what is doing it, you can: Go talk to mayor Lloyd in his house about Madulf's request. He is a little reluctant to trust ogres, but agrees to talk with them nonetheless. (27,500 experience)
 * Kill them
 * Ignore their request for alliance with village
 * Tell Minster Lloyd their proposal to protect the village and trade goods in exchange for living here without villagers informing the authorities

After a period of time, the Mayor returns from talking with them, go talk to Madulf again, and as thanks he gives you an item:

Shield of the Lost +2 (5% magic resistance)

Sources & references

 * Baldur's Gate II Walkthrough by Dan Simpson