Working Paperclip 4.2.0 watermark processor for Rails 4.x.x and Ruby 2.x.x

watermark.rb

# Rails.root /app/models/user.rb
class User
  has_attached_file :photo,
                    styles: {
                      medium: {
                        processors: [:watermark],
                        geometry:       "300x300>",
                        watermark_path: "#{Rails.root}/public/images/watermark.png"
                        convert_options: { "-strip -auto-orient -colorspace sRGB" } #or whatever options you want
                      },
                      thumb: "100x100>",
                    }
end

# Rails.root /lib/paperclip_processors/watermark.rb
module Paperclip
  class Watermark < Processor
    def initialize(file, options = {}, attachment = nil)
      super
      geometry = options[:geometry]
      @file = file
      @crop = geometry[-1,1] == '#'
      @target_geometry = Geometry.parse geometry
      @current_geometry = Geometry.from_file @file
      @convert_options = options[:convert_options]
      @whiny = options[:whiny].nil? ? true : options[:whiny]
      @format = options[:format]
      @watermark_path = options[:watermark_path]
      @position = options[:position].nil? ? "Center" : options[:position]
      @watermark_offset = options[:watermark_offset]
      @overlay = options[:overlay].nil? ? true : false
      @current_format = File.extname(@file.path)
      @basename = File.basename(@file.path, @current_format)
      # Rails.logger.info "watermark initialized"
    end
    
     # Returns true if the +target_geometry+ is meant to crop.
    def crop?
      @crop
    end

    # Returns true if the image is meant to make use of additional convert options.
    def convert_options?
      not @convert_options.blank?
    end

    # Performs the conversion of the +file+ into a watermark. Returns the Tempfile
    # that contains the new image.
    
    def make
      # Rails.logger.info "watermark make method"
      src = @file
      dst = Tempfile.new([@basename].compact.join("."))
      dst.binmode

      
      if @watermark_path.present?
        command = "convert"
        params  = %W['#{fromfile}']
        params += transformation_command
        params += %W['#{@watermark_path}' -gravity #{@position} -composite]
        params << "'#{tofile(dst)}'"
      else
        command = "convert"
        params = ["'#{fromfile}'"]
        params += transformation_command
        params << "'#{tofile(dst)}'"
      end
      
      Rails.logger.info 'params:' + params.to_s
      
      begin
        Paperclip.run(command, params.join(' '))
      rescue ArgumentError
        raise Paperclip::Error.new("There was an error processing the watermark for #{@basename}") if @whiny
      end
      
      dst
    end
    
    def transformation_command
      scale, crop = @current_geometry.transformation_to(@target_geometry, crop?)
      trans = %W[-resize '#{scale}']
      trans += %W[-crop '#{crop}' +repage] if crop
      trans << @convert_options if @convert_options.present?
      trans
    end
    
    def fromfile
      File.expand_path(@file.path)
    end

    def tofile(destination)
      File.expand_path(destination.path)
    end
  end
end

Happy to share! Thanks for pointing that out @b1nary! I had originally modified and got working an example watermark processor for an older paperclip version that was provided by someone else, and at the time I was pretty new to programming and didn't think anything of it. Will remove it from my source code. Cheers!