That is a vacuum switchover valve. When activated it allows vacuum to the upshift delay cable which in turn delays the upshift. It should only be active up to 60 degrees C, after which the car should shift normally. If you put vacuum on the green vacuum line going down to the cable, it should hold, if it leaks the cable is bad. You can also apply power and ground to the pins of the valve, it should switch with a small click and allow vacuum to pass when active.

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90 300TE 4-M
Turbo 103, T3/T04E 50 trim
T04B cover .60 AR
Stage 3 turbine .63 AR
A2W I/C, 40 LB/HR
MS2E, 60-2 Direct Coil Control
3" Exh, AEM W/B O2
Underdrive Alt. and P/S Pulleys,
Vented Rear Discs, .034 Booster.
3.07 diffs 1st Gear Start

90 300CE 104.980
Milled & ported head, 10.3:1 compression
197° intake cam w/20° advancer
Tuned CIS ECU
4° ignition advance
PCS TCM2000, built 722.6
600W networked suction fan
Sportline sway bars
V8 rear subframe, Quaife ATB 3.06 diff