Rumors said that way up north is the last town; the last vestige of civilization before crossing into the frozen north, purview of monsters and ogres and the last of the Rakshasa. Rumors said that these monsters of the icy wastes trickle down into the domain of civilized folk, destroying what they cannot eat. The rumors said that Rakshasa walk among the men, the only sign of their true nature their hands turned the wrong way. Rumors said that Canmere was a town of outlaws and dangerous men.
The journey north was weeks long. Careful to avoid notice as much as possible, you hunted while traveling and always wary of the king's men, rarely slept indoors. Your kind are not welcomed with open arms often, but rarely do you face blatant distrust. Never the less, you kept your distance from the folk of the realm, having only each other for company. It took weeks, but eventually, you crested a hill and saw a bustling town below you, nestled in the split of a river.
Three days now you have been in Canmere, watching and listening. The rumors were false, no monsters stormed the town, tearing through people and property alike. No giants besieged the pine mill. Rakshasa do not roam the streets, or if they do, they avoid the khajiit like a plague, though this is nothing new. The town is normal. A pair of taverns straddle the town, one outside the mill on the east part of town, the other on the west, catching the eye of weary merchants and travelers from the south. Dingy clay shingles cover the hovels of common folk, piled 3 stories high. Merchants travel from building to building, dragging rickshaws full of wares, selling to wives and shopkeeps alike.
Three mundane days. The local law (such as it is) seems to have taken notice of you, presumably as you are dressed for battle and survival, where as the other khajiit in the town dress like city folk. During your efforts to slip away un-noticed, you are cornered by a patrol. They seem cocky and ready to dole out a beating, spinning their clubs lazily with a glint in their eyes. Your apparent assailants outnumber you 2-1.
It appears you have a few choices:
Attempt to defend yourselves without killing.
Fight the heavily armored men to the death.
Attempt to talk it out.
Flee down a nearby alley.