Let g be a simple Lie algebra, Lg be the loop algebra of g. Fixing a point in S^1 and identifying the real line with the punctured circle, we consider the subalgebra Sg of Lg of rapidly decreasing elements on R. We classify the translation-invariant 2-cocycles on Sg. We show that the ground state representation of Sg is unique for each cocycle. These ground states correspond precisely to the vacuum representations of Lg.