We study the smooth-pasting property for a class of conditional expectations with reflected Levy process as underlying state process. A relationship between local times and regulators for the doubly reflected Levy process is established. As applications, we derive the analytic pricing formula for a zero-coupon defaultable bond when the default intensity （resp. the stochastic loss rate） is modeled as one-sided （resp. double-sided） reflected Levy processes. Finally, some numerical illustrations are provided.
