We have custom functions defined in java file inside BusinessEvents(BE) project, under javaSrc.
The functions are compiled without any error and ear file is generated successfully. 
While starting the be-engine, we got ClassNotFound error complains on a class created in javaSrc:
>>>>>>>>>>>>>>>>>>>>>>>
Debug [pool-1-thread-1] - [model.functions] Exception while loading function category 'XYZ'.
java.lang.NoClassDefFoundError: com/tibco/be/XYZ/SaxHandler
at java.lang.Class.getDeclaredMethods0(Native Method)
at java.lang.Class.privateGetDeclaredMethods(Class.java:2701)
at java.lang.Class.getDeclaredMethods(Class.java:1975)
at com.tibco.be.model.functions.impl.JavaAnnotationLookup.getMethod(JavaAnnotationLookup.java:1192)
at com.tibco.be.model.functions.impl.JavaAnnotationLookup.loadCategoryInParallel(JavaAnnotationLookup.java:1106)
at com.tibco.be.model.functions.impl.JavaAnnotationLookup.loadCatalogInParallel(JavaAnnotationLookup.java:982)
at com.tibco.be.model.functions.impl.JavaAnnotationLookup.processClassParallel(JavaAnnotationLookup.java:848)
at com.tibco.be.model.functions.impl.JavaAnnotationLookup.access$000(JavaAnnotationLookup.java:94)
at com.tibco.be.model.functions.impl.JavaAnnotationLookup$JarScanner.call(JavaAnnotationLookup.java:638)
at com.tibco.be.model.functions.impl.JavaAnnotationLookup$JarScanner.call(JavaAnnotationLookup.java:571)
at java.util.concurrent.FutureTask.run(FutureTask.java:266)
at java.util.concurrent.Executors$RunnableAdapter.call(Executors.java:511)
at java.util.concurrent.FutureTask.run(FutureTask.java:266)
at java.util.concurrent.ThreadPoolExecutor.runWorker(ThreadPoolExecutor.java:1149)
at java.util.concurrent.ThreadPoolExecutor$Worker.run(ThreadPoolExecutor.java:624)
at java.lang.Thread.run(Thread.java:748)
Caused by: java.lang.ClassNotFoundException: com.tibco.be.xyz.SaxHandler
at java.net.URLClassLoader.findClass(URLClassLoader.java:381)
at java.lang.ClassLoader.loadClass(ClassLoader.java:424)
at java.lang.ClassLoader.loadClass(ClassLoader.java:357)
... 16 more
 Warning [pool-1-thread-1] - [model.functions] Failed to fully load function category 'XYZ', moving on to next category.
 Error [pool-1-thread-1] - [model.functions] null
<<<<<<<<<<<<<<<<<<<<<<<

All supported platforms

This issue is caused by the mechanism used by be-engine's class loader to load the classes. During compilation, the com.tibco.be.xyz.SaxHandler has not been compiled thus ClassNotFound exception is thrown. This issue is fixed in 5.6.1 HF-03, Jira BE-27792. Upgrade to 5.6.1 and apply Hotfix-03 to get the fix of the issue.

If user is not able to upgrade, the issue can be workaround with the following approach:
- In BE project, export the SAXHelper.java to a jar file
- Configure the exported jar file as 3rd party jar dependency for BE project, also add it as external jar on Java Build Path for the project.
- Remove SAXHelper.java file from javaSrc as the same definition is provided by the jar file
- Rebuild the ear file and have the exported jar file copied to server on java path.

ClassNotFound exception on engine startup for custom function created inside BusinessEvents(BE) project