In this paper we aim at defining conceptual foundations for context-aware applications. We argue that the concepts of entity and context should be separated in conceptual models for context-aware applications. Further, we propose a novel approach that characterizes context as either intrinsic or relational. The concepts we propose in this paper have been inspired by and aligned with conceptual theories from the fields of philosophy and cognitive sciences. Since we concentrate on conceptual modeling, understandability and clarity are given precedence over properties such as efficiency and tractability.