Please update your plugin and read through https://www.ads-software.com/support/topic/before-you-post-please-read-2/ and https://www.ads-software.com/support/topic/fatal-error-allowed-memory-size-of-x-bytes-exhausted-4/ before posting again.
Running out of memory while running TCPDF is a common issue (Google it). I’ve done what I can on my end to improve the situation this morning by updating the bundled TCPDF package in Watermark PDF and refactoring the watermarking loop a bit. Otherwise, it’s really important for users to understand this plugin simply connects WooCommerce to the open source TCPDF library. ~90% of what’s happening when you click the WooCommerce file download button is in the TCPDF developers’ hands.
Most often when the plugin fails it’s because of a clash between TCPDF and the PDF which was fed to it. Have you tried other PDFs? If your PDF is malformed (which many PDFs are since PDF is an open spec), TCPDF might choke on it. You can try to fix its syntax by re-saving (“Export as PDF”) with the Apple Preview application.
You will need to provide more debugging information to me before I can pinpoint where your PDF is causing your server to run out of memory. 256MB is clearly plenty enough for simple online/website operations, but obviously not enough to run this PDF. These are resource-heavy operations. Many people are maxing out their memory (setting it to ∞) to process PDFs (but I don’t recommend that). Without knowing anything about your PDF or having any debugging information, I cannot say more.