If you haven't addressed your son's disrespect toward his teacher with him, do so now. Make sure he knows that you have high expectations for his behavior. Ask what he believes is the reason for his grades dropping and his attention problems. Help him address any problems he sees; if he states that someone sitting nearby is distracting him, ask the teacher to move him nearer to her or to the front of the class.
Ask the teacher to help you set up a positive reward system for your son. The teacher can send you daily notes (could be as simple as a check mark) to let you know how his day was. A good day can earn a walk around the block just with you or 15 minutes of telephone or computer time; 3 good days in a week can earn having a friend over to play on the weekend.
Talk with the school counselor. He or she may be able to give your son some individual time or include him in a small group.