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try adding -Xms256m also
or it could be that you've got a single object that needs more than 64k of memory ( think this causes problems)
java -Xms<some_min_size> -Xmx<some_max_size>
-Xms<size> set initial Java heap size
-Xmx<size> set maximum Java heap size
-Xss<size> set java thread stack size
you need to set an initial heap size to the value that you want to support apart from the initial heap size.
Do you have enough memory in the machine?