def process_directory(source, target, apikey, handler, overwrite=False):
    """Optimize and save png files form source to target directory.

    @param source: path to input directory
    @param target: path to output directory
    @param handler: callback holder, instance of handlers.BaseHandler
    @param overwrite: boolean flag to allow overwrite already existing
                      files in output directory.
    """

    handler.on_start()

    attempts = defaultdict(lambda: 0)
    input_files = files_with_exts(source, suffix='.png')
    next_ = lambda: next(input_files, None)

    current_file = next_()
    response = None
    last_processed = None

    while current_file:
        output_file = target_path(source, target, current_file)

        if os.path.exists(output_file) and not overwrite:
            handler.on_skip(current_file, source=source)
            current_file = next_()
            continue

        try:
            handler.on_pre_item(current_file)

            last_processed = current_file

            response = _process_file(current_file, output_file, apikey)
            current_file = next_()
        except StopProcessing as e:
            # Unauthorized or exceed number of allowed monthly calls
            response = e.response
            handler.on_stop(response.errmsg)
            break
        except RetryProcessing as e:
            # handle InternalServerError on tinypng side
            response = e.response
            if attempts[current_file] < 9:
                handler.on_retry(current_file)
                time.sleep(TINYPNG_SLEEP_SEC)
                attempts[current_file] += 1
            else:
                current_file = next_()
        finally:
            handler.on_post_item(response, input_file=last_processed, source=source)

    handler.on_finish(output_dir=target)