Place chocolate in top of a double broiler; bring water to a boil. Reduce heat to low; cook until chocolate melts.
Beat shortening at medium speed with an electric mixer until creamy; gradually add sugar, beating well. Add eggs, one at a time, beating after each addition. Add chocolate, mixing well.
Combine flour and next 3 ingredients; add to chocolate mixture alternately with buttermilk, beginning and ending with flour mixture. Mix at low speed after each addition until blended. Add water, mixing well. Stir in vanilla.
Pour batter into two greased and floured 9-inch round cakepans. Bake at 350º for 30 to 35 minutes or until a wooden pick inserted in center comes out clean. Cool in pans on wire racks 10 minutes; remove from pans, and cool completely on wire racks. Frost as desired.