The 10% penalty is only applicable to the taxable amount of the distribution. Since all of your distribution was from contributions, and not earnings, none of it is taxable. So there is no penalty.
If some of the $5000 distribution had been taxable (for example, let's say $3000 was taxable) the 10% penalty would still not be applicable, as long as you had, at least, $3000 of qualified educational expenses (e.g. tuition) during the year. It is not necessary that the actual distribution be used to make payments (the funds do not need to be "earmarked") .
