Kinston is leaving, but the franchise is moving to Zebulon as the new Carolina Mudcats in 2012.
The Southern League Mudcats are moving to Pensacola, FL in 2012 to replace the American Association franchise that was then sold onto Amarillo. They would have gladly moved this year, but the sale wasn't made in time.
If Frederick is forced out, there are a few markets where they could move for 2012... like Kinston (this is more of a humorous riposte than a rumor right now, but one never knows)...
Basically, MLB and MiLB have to ensure that there are 30 high-A franchises... so if Frederick does select the AtL over the CL, the franchise will definitely land somewhere in the CL footprint, even if it's a one-year arrangement like the one in Danville a while back, when the Durham-to-Myrtle Beach franchise shared Danville with the Appy League for a year while waiting for their ballpark to be completed.