<PAGE>   1
                                                                    EXHIBIT 10.3

[NATIONSBANK LETTERHEAD]



                                 March 16, 1999


WESTPOINT STEVENS INC.
507 West Tenth Street
WestPoint, Georgia 31833
Attention: Mr. Morgan M. Schuessler


     Re: Revision of Definition of "Maximum Restricted Payment Amount"
          and Minimum Net Worth Covenant

Dear Sirs:

Reference is made to that certain Second Amended and Restated Credit Agreement,
dated as of June 9, 1998, among WestPoint Stevens Inc. ("Borrower"), WestPoint
Stevens (UK) Limited and WestPoint Stevens (Europe) Limited (the "Foreign
Borrowers"), the various banks and lending institutions party thereto (the
"Banks"), and NationsBank, N.A. as agent (the "Agent") for the Banks (as
amended from time to time, the "Credit Agreement"). Capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the Credit
Agreement.

By their signatures below, the Borrower, the Foreign Borrowers and the Required
Banks hereby agree that the existing definition of "Maximum Restricted Payment
Amount" in Section 1.1 of the Credit Agreement shall be amended to read in its
entirety as follows:

          "Maximum Restricted Payment Amount" means the sum of (i) $99,210,000,
     plus (ii) 50% of the Consolidated Net Income from and after March 31, 1998
     until any relevant measurement date, plus (iii) the Net Cash Proceeds
     received by the Borrower from the exercise of stock warrants or options by
     employees or former employees of the Borrower in respect of Capital Stock
     of the Borrower from and after March 31, 1998, plus (iv) $21,790,978
     (representing the Net Cash Proceeds received by Alamac Sub Holdings Inc.
     from the sale of its facility located in Whitmire, South Carolina), and (v)
     beginning with the fiscal quarter ending nearest December 31, 1998, minus
     the lesser of $65,000,000 or 50% of the Consolidated Net Income from and
     after October 1, 1998 until any relevant measurement date.





                                  Member FDIC

<PAGE>   2
WestPoint Stevens Inc.
March 16, 1999
Page 2

By their signatures below, the Borrower, the Foreign Borrowers and the Required
Banks hereby agree that Section 7.11(a) be amended to read in its entirety as
follows:

               Minimum Consolidated Net Worth. Have a Consolidated Net Worth as
          of the last day of each fiscal quarter of not less than (i)
          $190,000,000, (ii) increased on a cumulative basis as of the end of
          each fiscal quarter of the Consolidated Parties, commencing with the
          fiscal quarter ending June 30, 1998, by an amount equal to forty
          percent (40%) of Consolidated Net Income (to the extent positive) for
          the fiscal quarter then ended, and (iii) further increased on a
          cumulative basis as of the end of each fiscal quarter of the
          Consolidated Parties beginning with the fiscal quarter ending nearest
          December 31, 1998 by an amount equal to the lesser of (A) fifty
          percent (50%) of Consolidated Net Income (to the extent positive) for
          each such fiscal quarter or (B) $65,000,000.

By their signatures below, each of the Subsidiary Guarantors acknowledges and
consents to this revision in the definition of "Maximum Restricted Payment
Amount" and each Subsidiary Guarantor agrees that this revision does not
operate to reduce or discharge any of such Subsidiary's obligations under any
of the Collateral Documents.

Until this letter agreement shall have been executed by the Borrower, the
Foreign Borrowers, the Subsidiary Guarantors, and the Required Banks, it shall
not be effective in revising either the definition of "Maximum Restricted
Payment Amount" or Section 7.11(a). Except for the revision to the definition
of "Maximum Restricted Payment Amount" and the revision of Section 7.11(a)
effected hereby upon the execution of this letter agreement by the Borrower,
the Foreign Borrowers, the Subsidiary Guarantors, and the Required Banks, the
Credit Agreement shall remain in full force and effect.

Please execute this letter agreement and cause each of the Foreign Borrowers
and the Subsidiary Guarantors to execute this letter agreement, and return such
completed signature pages to the Agent at your earliest convenience.


                                              Sincerely,
                                              
                                              NATIONSBANK, N.A., in its capacity
                                              as the Agent
                                              
                                              By: /s/ David H. Dinkins
                                                 -------------------------------
                                                        David H. Dinkins
                                              
                                              Title: Vice President
                                                    ----------------------------


ACKNOWLEDGED AND AGREED:

WESTPOINT STEVENS INC.

By: /s/ MORGAN M. SCHUESSLER
    ---------------------------------------
        Morgan M. Schuessler

Title: Executive Vice President - Finance
        and Chief Financial Officer
       ------------------------------------


                             [Signatures Continued]



                                       
<PAGE>   3
WestPoint Stevens Inc.
March 16, 1999
Page 3

WESTPOINT STEVENS (UK) LIMITED

By: /s/ Morgan M. Schuessler
    ---------------------------------------------
    Morgan M. Schuessler

Title: Director, Vice President & Treasurer
       ------------------------------------------


WESTPOINT STEVENS (EUROPE) LIMITED

By: /s/ Morgan M. Schuessler
    ---------------------------------------------
    Morgan M. Schuessler

Title: Director, Vice President & Treasurer
       ------------------------------------------


WESTPOINT STEVENS STORES, INC.

By: /s/ Morgan M. Schuessler
    ---------------------------------------------
    Morgan M. Schuessler

Title: Vice President & Treasurer
       ------------------------------------------


J.P. STEVENS & CO., INC.

By: /s/ Morgan M. Schuessler
    ---------------------------------------------
    Morgan M. Schuessler

Title: Vice President & Treasurer
       ------------------------------------------


WESTPOINT-PEPPERELL ENTERPRISES, INC.

By: /s/ Edward J. Jones
    ---------------------------------------------
    Edward J. Jones

Title: Vice President & Assistant Treasurer
       ------------------------------------------


J.P. STEVENS ENTERPRISES, INC.

By: /s/ Edward J. Jones
    ---------------------------------------------
    Edward J. Jones

Title: Vice President & Assistant Treasurer
       ------------------------------------------


ALAMAC HOLDINGS INC.

By: /s/ Edward J. Jones
    ---------------------------------------------
    Edward J. Jones

Title: Vice President & Assistant Treasurer
       ------------------------------------------

                            [Signatures Continued]


<PAGE>   4
WestPoint Stevens Inc.
March 16, 1999
Page 4



ALAMAC SUB HOLDINGS INC.

By: /s/ EDWARD J. JONES
   ----------------------------------------
              Edward J. Jones


Title: Vice President & Assistant Treasurer
      -------------------------------------


NATIONSBANK, N.A., as a Bank

By:
   ----------------------------------------

Title:
      -------------------------------------


THE BANK OF NEW YORK

By:
   ----------------------------------------

Title:
      -------------------------------------


THE FIRST NATIONAL BANK OF CHICAGO

By:
   ----------------------------------------

Title:
      -------------------------------------


SCOTIABANC INC.

By:
   ----------------------------------------

Title:
      -------------------------------------


WACHOVIA BANK, N.A.

By:
   ----------------------------------------

Title:
      -------------------------------------




                             [Signatures Continued]






<PAGE>   5
WestPoint Stevens Inc.
March 16, 1999
Page 4



ALAMAC SUB HOLDINGS INC.

By:                    
   ----------------------------------------

Title:                                     
      -------------------------------------


NATIONSBANK, N.A., as a Bank

By: /s/ DAVID H. DINKINS
   ----------------------------------------
             DAVID H. DINKINS

Title: Vice President
      -------------------------------------


THE BANK OF NEW YORK

By:
   ----------------------------------------

Title:
      -------------------------------------


THE FIRST NATIONAL BANK OF CHICAGO

By:
   ----------------------------------------

Title:
      -------------------------------------


SCOTIABANC INC.

By:
   ----------------------------------------

Title:
      -------------------------------------


WACHOVIA BANK, N.A.

By:
   ----------------------------------------

Title:
      -------------------------------------




                             [Signatures Continued]





<PAGE>   6

WestPoint Stevens Inc.
March 16, 1999
Page 4


ALAMAC SUB HOLDINGS INC.

By:                     
    ------------------------------
Title:
      ----------------------------


NATIONSBANK, N.A., as a Bank

By:                     
    ------------------------------
Title:
      ----------------------------

THE BANK OF NEW YORK

By: /s/ Robert F. Santoriello, Jr.
    ------------------------------
       Robert F. Santoriello, Jr.

Title: Assistant Vice President
       ---------------------------


THE FIRST NATIONAL BANK OF CHICAGO

By:                     
    ------------------------------
Title:
      ----------------------------


SCOTIABANC INC.

By:                     
    ------------------------------
Title:
      ----------------------------


WACHOVIA BANK, N.A.

By:                     
    ------------------------------
Title:
      ----------------------------


                             [Signatures Continued]


<PAGE>   7

WestPoint Stevens Inc.
March 16, 1999
Page 4


ALAMAC SUB HOLDINGS INC.

By:                     
    --------------------------
Title:
      ------------------------


NATIONSBANK, N.A., as a Bank

By:                     
    --------------------------
Title:
      ------------------------


THE BANK OF NEW YORK

By:                     
    --------------------------
Title:
      ------------------------


THE FIRST NATIONAL BANK OF CHICAGO


By: /s/ Kristen H. Hertel         
    --------------------------
   
Title: Vice President
    --------------------------


SCOTIABANC INC.

By:                     
    --------------------------
Title:
      ------------------------


WACHOVIA BANK, N.A.

By:                     
    --------------------------
Title:
      ------------------------


                             [Signatures Continued]


                                      
<PAGE>   8

WestPoint Stevens, Inc.
March 16, 1999
Page 4



ALAMAC SUB HOLDINGS INC.

By:                               
    ------------------------------

Title:                            
       ---------------------------


NATIONSBANK, N.A., as a Bank

By:                               
    ------------------------------

Title:                            
       ---------------------------


THE BANK OF NEW YORK

By:                               
    ------------------------------

Title:                            
       ---------------------------


THE FIRST NATIONAL BANK OF CHICAGO

By:                               
    ------------------------------

Title:                            
       ---------------------------


SCOTIABANC INC.

By: /s/                               
    ------------------------------

Title:                            
       ---------------------------


WACHOVIA BANK, N.A.

By:                               
    ------------------------------

Title:                            
       ---------------------------


                            [Signatures Continued]






<PAGE>   9
WestPoint Stevens Inc.
March 16, 1999
Page 4


ALAMAC SUB HOLDINGS INC.

By:
   -------------------------------

Title:
      ----------------------------


NATIONSBANK, N.A., as a Bank

By:
   -------------------------------

Title:
      ----------------------------


THE BANK OF NEW YORK

By:
   -------------------------------

Title:
      ----------------------------


THE FIRST NATIONAL BANK OF CHICAGO

By:
   -------------------------------

Title:
      ----------------------------


SCOTIABANC INC.

By:
   -------------------------------

Title:
      ----------------------------


WACHOVIA BANK, N.A.

By: /s/ REGINALD T. DAWSON
    ------------------------------
         REGINALD T. DAWSON

Title: SVP
       ---------------------------


                             [Signatures Continued]


<PAGE>   10
WestPoint Stevens Inc.
March 16, 1999
Page 5


SOCIETE GENERALE

By:                    
   ------------------------------------

Title:                                 
      ---------------------------------


ABN AMRO BANK, N.V.       

By: /s/                                       By: /s/
   ------------------------------------          -------------------------------

Title: VICE PRESIDENT                         Title: VICE PRESIDENT
      ---------------------------------             ----------------------------


SUNTRUST BANK, ATLANTA

By:
   ------------------------------------

Title:
      ---------------------------------


By:
   ------------------------------------

Title:
      ---------------------------------


FIRST UNION NATIONAL BANK         

By:                 
   ------------------------------------

Title:                      
      ---------------------------------


FLEET BANK, N.A.

By:
   ------------------------------------

Title:
      ---------------------------------





                             [Signatures Continued]




<PAGE>   11
WestPoint Stevens Inc.
March 16, 1999
Page 5


SOCIETE GENERALE

By:                    
   ------------------------------------

Title:                                 
      ---------------------------------


ABN AMRO BANK, N.V.       

By:
   ------------------------------------

Title:
      ---------------------------------


SUNTRUST BANK, ATLANTA

By: /s/ LAURA KAHN
   ------------------------------------
           Laura Kahn

Title: SENIOR VICE PRESIDENT
      ---------------------------------


By:
   ------------------------------------

Title:
      ---------------------------------


FIRST UNION NATIONAL BANK         

By:                
   ------------------------------------

Title:                      
      ---------------------------------


FLEET BANK, N.A.

By:
   ------------------------------------

Title:
      ---------------------------------





                             [Signatures Continued]






<PAGE>   12
WestPoint Stevens Inc.
March 16, 1999
Page 5


SOCIETE GENERALE

By:                    
   ------------------------------------

Title:                                 
      ---------------------------------


ABN AMRO BANK, N.V.       

By:
   ------------------------------------

Title:
      ---------------------------------


SUNTRUST BANK, ATLANTA

By:
   ------------------------------------

Title:
      ---------------------------------


By:
   ------------------------------------

Title:
      ---------------------------------


FIRST UNION NATIONAL BANK         

By: /s/ ROGER PELZ
   ------------------------------------
           Roger Pelz

Title: Senior Vice President
      ---------------------------------


FLEET BANK, N.A.

By:
   ------------------------------------

Title:
      ---------------------------------





                             [Signatures Continued]






<PAGE>   13

WestPoint Stevens, Inc.
March 16, 1999
Page 5



SOCIETE GENERALE

By:                               
    ------------------------------

Title:                            
       ---------------------------


ABN AMRO BANK, N.V.         

By:                               
    ------------------------------

Title:                            
       ---------------------------


SUNTRUST BANK, ATLANTA

By:                               
    ------------------------------

Title:                            
       ---------------------------


By:                               
    ------------------------------

Title:                            
       ---------------------------


FIRST UNION NATIONAL BANK                  

By:                               
    ------------------------------

Title:                            
       ---------------------------


FLEET BANK, N.A.

By: /s/  STEVEN NAVARRO                              
    ------------------------------
         Steven Navarro

Title:   SVP                         
       ---------------------------


                            [Signatures Continued]







<PAGE>   14
WestPoint Stevens Inc.
March 16, 1999
Page 6


AMSOUTH BANK

By: /s/ 
    ---------------------------------------
    
Title: Vice President
       ------------------------------------


COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK NEDERLAND",
NEW YORK BRANCH


By: 
   ----------------------------------------

Title: 
      -------------------------------------


By:
   ----------------------------------------

Title:
      -------------------------------------


NATIONAL WESTMINSTER BANK PLC


By:
   ----------------------------------------

Title:
      -------------------------------------