Image Upload Fails

[yosemite]

please help.

after upgrading i am unable to upload any images. i have gone through all the tests:

FTP servers= all green and ok
Sever Tools= Imagemagick, tests ok and shows image, same with GD 2
Paths= seems ok, same as before upgrade
Resize methods= they all test ok, when i run the test i can see the image output and i can test images in the UPLOAD folder
UPLOAD folder is 777
ee_temp_upload is 777my next step is i ftp a image to the UPLOAD folder then go to "Upload to database" where i see the image. I select the exhibition, image and hit upload. it then goes to the "RESIZING, UPLOADING AND INSERTING TO DATABASE" where there is the info but no image. on the top right there is:
thumbnail:microthumbnail:http://www.yosemitestock.com/photos2/thumbs/img_7840.jpg http://www.yosemitestock.com/photos2/microthumbs/img_7840.jpg for non-resized (IMAGEMAGICK 550) (http://www.yosemitestock.com/photos2/normal/img_7840.jpg)where i can see it by ftp


the system message reads;

msg 3257 | internal ftp: QUIT
msg 3256 | internal ftp: LOCAL: 'img_7840.jpg': ERRORS reported by resize system, upload canceled. See previous message ids for explanation.
msg 3255 | IMAGEMAGICK: REMOVE PROFILE, RESIZE AND SHARPEN: /usr/local/bin/convert -size 43x28 UPLOAD/ee_temp_upload/temp_31c9fe1.miff -resize 43x28! +profile '*' -quality 80 UPLOAD/ee_temp_upload/img_7840.jpg | OK
msg 3254 | IMAGEMAGICK: WATERMARK: /usr/local/bin/composite -gravity Center watermarks/cf2.gif UPLOAD/ee_temp_upload/temp_31c9fe1.miff UPLOAD/ee_temp_upload/temp_31c9fe1.miff
IMAGEMAGICK ERROR:

| return value: 1
POSSIBLE REASONS:
SAFE MODE ON? EE can not run ImageMagick when is it located outside PHP safe mode exec dir.
IMAGE IS EMPTY? Perhaps source image was zero size.
IMAGEMAGICK PATH CHANGED? Maybe your server admin has moved IM to another location.
IMAGEMAGICK MISCONFIGURED? Is IMAGEMAGICK installed with libjpeg and other correct support libraries?
FOLDER PERMISSIONS WRONG? check that UPLOAD folder and ee_temp_upload inside it are chmod 0777 (full permissions)

msg 3253 | IMAGEMAGICK: CREATE MIFF: /usr/local/bin/convert ./UPLOAD/img_7840.jpg UPLOAD/ee_temp_upload/temp_31c9fe1.miff | OK
msg 3252 | internal ftp: LOCAL: Working directory changed to '/public_html/photos7/microthumbs'
msg 3251 | internal ftp: CWD: 250 OK. Current directory is /public_html/photos7/microthumbs
msg 3250 | internal ftp: CWD /public_html/photos7/microthumbs
msg 3249 | internal ftp: CWD: 250 OK. Current directory is /public_html/photos7/microthumbs
msg 3248 | internal ftp: CWD /public_html/photos7/microthumbs
msg 3247 | internal ftp: LOCAL: Logged in as *********************

[yosemite]

found problem, in the resize methods>thumbs and microthumbs, the watermark box had been checked and the watermark image, empty listing was the choice. i guess this prevented the thumbs and microthumbs from being generate. i unchecked the boxes and it and all uploads now work.