These are the processes currently running: from top command.

These are the ulimit -a settings

This is the output of trying to ssh into local Ubuntu VM (I am able to login here via VirtualBox interface)
$ssh -v -v -v spgen@192.168.1.11
OpenSSH_6.2p2, OSSLShim 0.9.8r 8 Dec 2011
debug1: Reading configuration data /Users/spgen/.ssh/config
debug1: /Users/spgen/.ssh/config line 1: Applying options for *
debug1: Reading configuration data /etc/ssh_config
debug1: /etc/ssh_config line 20: Applying options for *
debug1: /etc/ssh_config line 102: Applying options for *
debug2: ssh_connect: needpriv 0
debug1: Executing proxy command: exec ssh 10.0.2.15 -W 192.168.1.11:22
debug1: permanently_drop_suid: 501
debug1: identity file /Users/spgen/.ssh/id_rsa type -1
debug1: identity file /Users/spgen/.ssh/id_rsa-cert type -1
debug1: identity file /Users/spgen/.ssh/id_dsa type -1
debug1: identity file /Users/spgen/.ssh/id_dsa-cert type -1
debug1: Enabling compatibility mode for protocol 2.0
debug1: Local version string SSH-2.0-OpenSSH_6.2
fork failed: Resource temporarily unavailable
ssh_exchange_identification: Connection closed by remote host
ssh_exchange_identification: Connection closed by remote host
ssh_exchange_identification: Connection closed by remote host
----
This is the output of trying to SSH into remote AWS server. ( I am able to login through web interface here)
$ssh -v -v -v -i /Users/spgen/pem-files/123.pem spgen@54.94.230.41
OpenSSH_6.2p2, OSSLShim 0.9.8r 8 Dec 2011
debug1: Reading configuration data /Users/spg/.ssh/config
debug1: /Users/spgen/.ssh/config line 1: Applying options for *
debug1: Reading configuration data /etc/ssh_config
debug1: /etc/ssh_config line 20: Applying options for *
debug1: /etc/ssh_config line 102: Applying options for *
debug2: ssh_connect: needpriv 0
debug1: Executing proxy command: exec ssh 10.0.2.15 -W 54.94.230.41:22
debug3: Incorrect RSA1 identifier
debug1: permanently_drop_suid: 501
debug3: Could not load "/Users/spgen/pem-files/123.pem" as a RSA1 public key
debug1: identity file /Users/spgen/pem-files/123.pem type -1
debug1: identity file /Users/spgen/pem-files/123.pem-cert type -1
debug1: Enabling compatibility mode for protocol 2.0
debug1: Local version string SSH-2.0-OpenSSH_6.2
fork failed: Resource temporarily unavailable
ssh_exchange_identification: Connection closed by remote host
ssh_exchange_identification: Connection closed by remote host
ssh_exchange_identification: Connection closed by remote host"
---
I guess the processes is not the issue, but maybe something to do with ssh config files.
As you rightly guessed 'fork failed' is happening on the local system. Would appreciate any pointers.
TIA.