The Denver Nuggets have signed six-time NBA all-star Walter Davis who was the all-time Phoenix Suns leading scorer and a key witness in an Arizona drug investigation last year.

Davis, a 33-year-old 6-foot-6 guard, has scored more than 15,000 points playing his entire NBA career with the Suns.He came back from a severe knee injury in the 1984-85 season only to be suspended for 11 games in late 1985 for drug and-or alcohol abuse. He was suspended again without pay in 1987 for more treatment.

The Nuggets announced Wednesday that Davis was signed to a two-year contract that exhausted the Nuggets' league salary cap of $6.7 million for the team in total player contracts.

Nuggets president and general manager Pete Babcock said that meant two popular Denver players - free agents T.R. Dunn and Mike Evans - would be released.

Asked about his drug problems, Davis said: "I can only speak of the present. I have 15 months of sobriety. I think that's pretty powerful. It means a lot to me."

"I've known Walter personally since the mid-1970s," said Babcock at Wednesday's news conference. "(Coach) Doug (Moe) knows him personally. We feel comfortable with him."

Babcock said the Nuggets pursued Davis because the team was still interested in finding someone who could shoot from the outside.

"Since the season concluded, we have been looking to fill some holes," Babcock said. "We felt we needed to rebound better and get better scoring from the perimeter."

Babcock would not disclose terms of the contract, but the Rocky Mountain News said it would pay Davis an estimated $400,000 per season.

Dunn, 33, earned about $400,000 with the Nuggets last season, while Evans, 33, earned about $175,000.

Suns coach and director of player personnel Cotton Fitzsimmons said it was "hard to see Walter go."

"But I think he's going to a good situation," Fitzsimmons said. "Denver pushes the ball up and down the floor. Walter can play that kind of game well. He'll be a good player for the Nuggets."

Davis became the second unrestricted free agent in two days to change teams when he signed the contract with the Nuggets. Tom Chambers, a former Boulder, Colo., high school star, signed a day earlier with the Suns after playing with Seattle for five seasons.

Davis became an unrestricted free agent following the 1987-88 season.

Unrestricted free agents are allowed to sign with any NBA team without former clubs receiving any compensation or having the right of first refusal, under terms of the league's new collective bargaining agreement.

Davis said earlier he would retire after next season. But on Wednesday, he said, "At that time, I had back problems. My back feels great now. I think I would be selling myself short if I retired now. I'll re-evaluate it again after two years."

The Suns reportedly had offered Davis a one-year contract to return to the team for a reported $450,000 - about half of his salary last season. He also was told he would be used as a sixth man.

"I'm excited to be here in Denver and play for the Nuggets. They had a great year last year," he added.

Davis, who played collegiate ball at North Carolina, was the fifth selection in the 1977 NBA draft. In his 11 seasons with the Suns, Davis averaged 20 points or better seven times, including a career-high 24.2 per game in his first year to earn rookie of the year honors.

He has been ranked among the league's top 20 scorers five times, most recently in 1986-87 when he ranked 11th in the NBA with 23.6 points per game.

Davis ranks 36th on the NBA's all-time scoring list with 15,666 points, averaging 20.5 points over 766 games. He made six all-star appearances, including four straight from 1978 to 1981, and also played in the 1984 and 1987 games.

Davis testified before a Maricopa County grand jury investigating drug use in the Phoenix area in March 1987 that he started using cocaine in 1977 - his rookie season - and continued using it twice a week until December 1985.

He entered a rehabilitation clinic in Van Nuys, Calif., on Dec. 12, 1985, for cocaine and alcohol abuse and returned to the team on Jan. 10, 1986.

Davis testified he used cocaine three times after his release and was admitted to the clinic again on April 16, 1987, for 60 days of additional treatment and was suspended from the Suns without pay.

His testimony under a grant of immunity led to the indictments of several current and former Suns players for various drug charges ranging from possession to trafficking in narcotics.