A one-dimensional two-band Hubbard model describing CuO chains is considered in the limit of zero bandwidth. Onsite and nearest-neighbor Coulomb interactions are included in the description. Various density correlation functions are calculated exactly at arbitrary concentration of holes. For increasing values of the intersite Coulomb interaction V, the system is driven towards both a charge-transfer instability and a phase separation instability when doped away from half filling. In the case of one hole added to the half-filled system, it is shown that a hole binds to a biexciton. Three-body bound states recently proposed to produce the marginal Fermi-liquid spectrum also occur naturally in the model, but a finite amount of doping away from half filling is necessary for them to form to an appreciable extent in the thermodynamic limit.

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