A tool holder that may be used for storing and/or transporting tools, such as CNC equipment, and a method of use. The tool holder includes a tray having a plurality of receptacles for storing tools and a cover for at least one of the plurality of receptacles. The cover keeps staged tooling clean and workers safe while increasing efficiency and security. The preferred cover includes a body having a first portion, a second portion, a base extending from the second portion and an indicator to designate the type or condition of the tool. Additionally, most preferably, the first piece is transparent and the second piece is opaque. Preferably, the first piece further includes a vent to reduce moisture buildup within the cover. Alternatively, the preferred cover may be made of a one-piece construction. In preferred embodiments, the cover may be removably secured to the tray with fastening elements.