I prefer to keep the number of function arguments to four or fewer. 

It sounds like the function "merges" a rounded rectangle it into some environment. The first thing that comes to mind is to separate the activity into two parts: defining the rectangle, and then merging it.

 rr = roundedRectangle(width, height, cornerRadius)
 environment.merge(rr, how, alignment, where)

If the cornerRadius has a convenient default (e.g. zero), then you could switch to:

 rr = roundedRectangle(width, height).setCornerRadius(r)

If the number of options to merge increases, then you could create a parameter object for those:

 mm = mergeMethod(position).setAlignment(topCenter).setBehavior(...)
 env.merge(rr, mm)