CAKE:

4 (1 oz. each) squares Bakers unsweetened chocolate
1/2 cup water
1 3/4 cups sugar, divided
1 2/3 cups flour
1 teaspoon baking soda
1/4 teaspoon salt
1/2 cup (1 stick) butter, softened
3 eggs
3/4 cup milk
1 teaspoon vanilla
1 cup chopped diamond walnuts

Preheat oven to 350°F. Microwave chocolate, water and 1/2 cup of the sugar in a microwave-safe bowl on high 1-2 minutes or until chocolate is almost melted, stirring halfway through the heating time. Remove and stir until completely melted. Cool to lukewarm.

Mix flour, baking soda and salt; set aside. Beat butter and the remaining sugar in a large bowl until light and fluffy.

One at a time, add eggs, beating well after each addition. Add flour mixture alternately with milk, beating after each addition until smooth. Stir in chocolate mixture and vanilla. Pour into 2 greased and floured 9-inch round layer pans.

Bake at 350°F for 30-35 minutes or until cake springs back to the touch.

Cool in pans 10 minutes.

Frost and sprinkle walnuts around the top edge of the cake.

FROSTING:

4 (1 oz. each) squares Bakers unsweetened chocolate
2 tablespoons butter
4 cups confectioners' sugar
1/2 cup milk
1 teaspoon vanilla

Microwave chocolate and butter in a large microwave-safe bowl on high for 1-2 minutes or until butter is melted. Stir chocolate until completely melted. Stir in confectioners' sugar, milk and vanilla and blend until smooth. Let stand, if necessary, until of spreading consistency, stirring occasionally. Spread quickly. (Add an additional 2-3 tsp. of milk if frosting becomes too thick.)

Makes about 2 1/2 cups frosting.

Serving Size: 12