How did you choose this breeder? Did they make you pay a deposit?
Do not take a sick or sickly puppy unless you are prepared for the vet bills and heartache.
It was good of them to let you know there were problems, but a lot of other things don't sound right. Like the others said.
herpes is a virus - there are different strains - from cold sores to dead liver. In humans some of these can be vaccinated against but antibiotic will not help.
But it is also odd that the mother of the puppies seems to have gotten a bacterial infection - makes me think she was either injured or not cared for properly (living in squalor) during the pregnancy.
Sometimes thinks like this happen due to bad luck, but the whole scenario seems unlikely and inconsistent to me.
If you're not sure, maybe ring the RSPCA or someone at the kennel club in your state and ask them what they think.