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The modern mobile ubiquitous computing environment, with reasonable connectivity, processing power and sensing capabilities on portable devices, present applications and services with the opportunity to be truly context-aware. But building context-aware applications has large development overheads due to complexities of sensing, aggregating and inferencing context information. To reduce the developers' burden, over the last decade, many context-aware application development frameworks and toolkits have been created. Yet none of these existing solutions address the specific challenges, opportunities and constraints presented by the modern mobile computing environment. This paper describes a next generation software toolkit which provides a framework, including context inferencing, communication, storage, power management, security and intelligibility support, for developing more powerful context-aware applications for the modern mobile environment. The Hermes toolkit and framework are designed around a loosely coupled component-based architecture that facilitates the decomposition of context-aware applications into multiple smaller components, each of which captures, transforms or aggregates pieces of context information to produce the high-level context used by applications. In this paper we present the overall architecture of Hermes, a sample application design and our implementation details.