Kagain's tending his mercenary business at the center of Beregost. (Left of the town square with the big obelisk that says "Beregost", or you can just look for the town cryer if it's daylight and go into the shop to the left of him) He'll join your party if you agree to undertake his offer to look for a lost caravan. This is the easiest character quest, all you have to do is hop back to the area north of Beregost and Kagain'll lose interest in looking for the caravan, at which time he'll join you for good. If you want some comedy, bring Kagain along, his remarks are rather humerous, and to watch a nice Dwarf quarrel, put him and Yeslick together. ~_-